Success in pre-construction condominium investing can be boiled down to one thing; access. The truth is investors deal with finite inventories when purchasing at Toronto’s premiere developments. Below are five tips for those looking to invest in pre-construction real estate throughout Toronto and surrounding communities.
Buy Small – Studios and one bedroom units are your safest investment. They offer the largest rental market, lowest starting prices, minimal carrying costs and over time it’s much easier to diversify and add to your portfolio of real estate holdings.
Buy Early – Arguably the number one rule of condo investing, period. The fastest rates of appreciation occur closest to the start of a project sales cycle. If you can walk in off the street and buy a condo, you’re buying the wrong one. The key is to be in the first percentile of buyers at a given project.
Buy What You Know – There’s a certain comfort in buying into a neighbourhood or community that you know. While not all condos are built equally, it can be most profitable to look first at projects in areas you are familiar with.
Find Your Insider – The realtor who sold you your four bedroom house is not an insider and doesn’t know pre-construction real estate. Pre-construction is as different to resale as commercial real estate is to other real estate markets. Developers work with very small groups of agents and give them priority access and pricing. Find them and use them. We strongly suggest looking at these guys.
Look For Leasebacks – Leaseback programs are a staple of deals we negotiate with builders and their sales teams. They are tailored for investors and effectively guarantee a fixed rental rate for a set period of time (usually one to two years) after tenants take Occupancy. These can lead to early cash flow and create turnkey investment opportunities.
For years REITs, pension funds and other institutional investors understand that student housing close to colleges and universities provide a consistent high performing investment. The proposition is simple, buy near a major post secondary institution and rent to students who require accommodations.
The average Toronto area re-sale home price rose 1.7 per cent year over year in January to $748,328, including single-family homes and condos, according to the Toronto Real Estate Board (TREB), which is forecasting a 4 per cent annual price increase for 2019.
Looking for a pad within walking distance of Toronto's subway system? Good call. You'll get around the city a lot cheaper and faster than you would by taking a car—you just may have to pay a bit more for your home upfront.