Condo rentals in the GTA have successfully enjoyed bidding wars with a long list of qualified tenants, but you need to understand what kind of pre-construction condo is best to invest in. Subsequently, several things need to be considered. We have discussed some ways that will maximize the return on a pre-construction condo.
You will find several fresh condos in the market. The key is to understand what attracts the interest of potential tenants the most. All it takes is the right time and recognition of the needs of the tenant.
What Are The Needs of Toronto Rental Market
Of course, the overall look of condos matters, but renters really value the amenities that come along with a condo. Here is a shortlist of features that you should consider:
- Nearest Proximity to transit
Many people living in Toronto do not own a vehicle. Toronto’s TTC subway, as well as the streetcar system, has proven to be the most reliable means of transportation. If the condo is not close to a Go Transit Stop or TTC, make sure that it has parking available and has prompt access to highways.
- Neighbourhood & Building Amenities
For most rental, basic neighbourhood amenities like grocery stores, fine dining restaurants, or shopping centers matter a lot. For example, condos located near a mall or shopping centre are in high demand. Having these amenities nearby reduces the hassle of traveling a distance for every minute thing.
On the other hand, condo buildings themselves need to have their own set of amenities. For example, a rooftop pool, a gym, party room, business centre or co-working spaces have a lot of appeal for rentals. These core essentials make a condo far more valuable.
- Benefit of Future City Projects
There is an evident shift in the nesting of condo development every decade. Conventionally, this results in further infrastructure development in the area. Keeping an eye out on the emerging projects is critical to snagging the right condo at the right time.
Tips to Maximize Return On a Pre-Construction Condo Investment
- Invest in a Builder First
Investing in preconstruction condos becomes virtually risky free when you opt for a reputable builder. Go for a builder who has a solid history of building without unnecessary delays and a top rating with Tarion, Ontario’s new home warranty protection. It is important to note the post-closing track record of the builder.
Moreover, you need to check the projects the builder handled 5+ years ago. Are the buildings still operating in a healthy financial position today?
- Observe the Delay Period
In an infrastructure industry, delays are not unheard of. In most cases of condo development, delays eventually happen. However, delays aren’t always carriers of bad news. First, delaying can give you more time before you decide on the closing of the condo. Second, you can leverage the value of the property market 5:1 (considering you have 20% down like in most cases).
Another factor is that improper handling of delays can benefit you up to $7,500. The delayed occupancy rebate is no less a boon in Toronto for property investors.
Most condos are delayed by 3 to 8 months. However, if the builder delays a project for more than a year, it is a sure sign of poor financing. Consider it is a red flag that will save you from unfavorable investments.
- 10-Day Cooling-off Period
The 10-Day Cooling-Off period is regulated by Ontario law as mandatory for all new pre-construction condos. This law has proved itself to be greatly beneficial, but only applies to the pre-construction market and is not applicable to resale.
As per the Ontario law, once you purchase the condo from a builder, you are given a period of 10 days from signing date to confirm if you really want the condo unit or not.
During this rescission period you can have your lawyer go through the terms of Agreement of Purchase and Sale and negotiate the closing costs items and decipher the legal jargon for you so you can make a fully educated purchase decision.
- Know the Difference Between Interim Occupancy and Closing
Interim occupancy refers to the first date when you are handed the keys to the condo unit. Every week owners of different floors are scheduled to occupy. This way, not everyone moves in at the same time. At this point, the condo is not registered. In most cases, the registration and the closing happen 3-6 months after the interim occupancy. However, there are some builders who have efficiently moved the whole process at a faster rate as quick as days apart.
During this time, you will be charged with the interim occupancy fee. It includes the monthly condo maintenance fee. The fee begins with the interest payment of the 80% you borrowed (assuming you put 20% as the down payment). The interest is determined through the Bank of Canada, and the payment is given to the builder. The interim period will see fewer costs than post-registration. Other costs will include general maintenance of the building and the amenities. However, this is shared with the other residents.
The final closing starts when the registration of the building is complete with the land registry office. This is when your bank has paid the 80% to the builder, and your mortgage begins. Final adjustments are made and closing costs are calculated. Closing costs include legal fees, land transfer tax, and other factors included in the Agreement of Purchase and Sale. Once done, you will be given the official title.
There are several factors to consider when buying a condo. However, the amenities make it much more attractive than buying a single house. Hence, condos have been an interesting proposition for many real estate seekers. In addition to it, there are other factors like attractive locations and easy transit access.
These make condos worth investing in. Before you seal the deal, don’t forget to do your homework. Relying only on the developer might not always be helpful. Knowing briefly about the procedures involved helps a lot.
Contact us to get a detailed consultation on buying your next condo investment property.