1. Your Average Sales Rep/Broker CANNOT Get You The Best Deal

Yes, it’s true: Anyone with a real estate license can walk you into a sales centre and stand by while you sign paperwork and tell you about how amazing it’s going to be living in your brand new condo. But only a handful of Toronto agents (I can literally count them all on one hand) can get you in the earliest and at the best possible price with the best possible terms. This is a fact and the person that’s been showing your resale property is not likely that person. (hint: we can).

There’s something called an “Allocation”, meaning, we’re given a certain number of units to sell to our clients BEFORE any real marketing or sales events happen. This is literally a shopping bag full of some of the best units in the development that only our clients can buy. There’s some real power in that. Once you’re able to walk in to a sales centre and buy, it’s usually too late.

2. Why Are You Buying Pre Construction & Not Re-Sale?

There are some benefits to buying pre construction in Toronto and some to buying re-sale. Why are you buying pre construction? If you think you’ll be able to buy pre construction and have $100K plus returns upon completion STOP right now because the sun has set on those days. Real Estate is a buy and hold game…especially in pre-construction. When you add up all the development charges and other costs associated with carrying and closing on a pre construction product you’ll notice that there’s very little margin there. Although, to increase your chances of not losing your shirt on a sale upon completion…see point 1.

3. Do You Know Where You’ll Be 5 Yrs From Now?

You may think this is a strange question but if you’re 25yrs old now and about to put a deposit on a 450sqft condo that won’t be ready for you until 2021 will you be at a point in  your life where you’d still want a 450sqft condo? Don’t get all distracted by the glitz and glamour of the sale centre and the “lifestyle” your agent sells you. You’ve got to wait a looooong time before you can “live the dream”! Make sure you are buying a product you see yourself in 4-6 years from now. A lot can change in that time! We’ve had folks need to fire-sale their product because of children, marriages etc.. and not be able to carry two places at once. We don’t want that to be you!

4. What Happens To Your Deposit?

You know all that money you put down in 5% increments after you sign on the dotted line (you’re in for up to 15% cash within the first year but we can show you how to avoid that)? Well, if you saw the recent Urbancorp Debacle, well….we’ll just let you google that.

“Deposits paid for condominium units are protected by Tarion up to a maximum of $20,000 and any deposit amounts are protected by the trust provisions of the Condominium Act. Deposits paid for all other new homes are protected by Tarion up to a maximum of $40,000.”

Now, don’t worry, your money above and beyond $20K isn’t in the wind. Most of the time a developer doesn’t use the deposit money to develop. They secure a construction loan using the deposit as collateral. But what if they need to withdraw the money?

“…if they need to withdraw the deposit money from the lawyer’s trust account then the first $20K is covered by Tarion and any amount over and above that is covered by a special deposit insurance the developer must obtain in order for the money to be released. ” – David Young, Lawyer @ WeAreLaw.ca

The big problem is that if the development doesn’t happen and you’ve locked up say $50K in a new development, sure you get that money back BUT the market has likely appreciated to the point where that $50K won’t go as far. Make sense?

5. How Important Is The Current View?

There is a very good chance that what you see now will not be what you see in a few years. Even if it’s a nice old building and your agent says “don’t worry, they can’t build there”…sadly, they probably can so if a clear view is important to you, some real research is very important. Queen Street East for example is almost entirely owned by developers now. All those old 2 storey buildings with retail at grade and residential above are mostly sold. From Booth Ave to Carlaw on both sides.

6. Have You Thought Of The Tax Implications As An Investor?

There are a ton of HST implications in new homes. Did you know there’s up to a $24K HST rebate that’s already built into the purchase price that you may have to repay if you rent out the unit instead of move into it? There’s so much to talk about with HST and pre construction that it’s best we do that in person. You can get an idea here on our blog but we’d be happy to speak to you in person as well.

This is a very important decision that shouldn’t be clouded by the glitz and glamour of the sales centre and the usually unlicensed onside sales rep. If we can’t help you, we’ll put you in the hands of someone who can so message us right now to see what we’ve got on the horizon. Right now, we’re going all in on Canary District and Leslieville.

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