Dec 13, 2016

Why Invest in Pre-Construction Condos

In Toronto’s vibrant real estate market, an early investment in a pre-construction condo offers greater return on investment once the building is completed. Despite the growing concern about shifting costs and market saturation, pre-construction condos are still a worthwhile investment – but not for the reasons you probably have in mind. Take advantage of the current low lending rates in Canada when you work with Superior Realty Point.

Rather than wait a few years before you make marginal gains on a resale, turning a real estate to a rented property can be a profitable long lasting investment. Leasing your urban condo can increase the property value as well as earn you healthy returns in the form of rents.
You can invest less- and make more!

It is important to know that real estate can help you generate greater profits on smaller investments unlike mutual funds or stocks where your profit margins are largely dictated by the amount of your initial investment.

However, real estate appreciates in relation to the total worth of the property, and not the amount invested. For instance, you invest 30% of the property’s total worth, the banks make up the other 70%, if and when the property records a 100% growth, the banks still funds your increasing equity. With the ideal property, rental payments cover your monthly and principal fees. The tenant pays you a mortgage, but you still own the property.

They’re eventually less expensive than resale

Many Investors are cautious about investing in a project that may take years to yield returns, a challenge that always forces them to ponder on resale condominiums. While for a fact there are no earnings on an unconstructed condominium project, with pre-construction condos you can avoid the huge fees that come with resale properties.

Inspection and closing fees are not applicable to a pre-constructed property neither are price negotiations. Property developers cover the cost of your realtor fee too.

Resale costs can increase the rate of your carrying cost of the rental property, and you would need to rent at a higher price. These fees would increase your rental price, which would amount to monthly losses on vacant units as well as stretch the period it would take to recoup your initial investment.

You can cover your monthly costs while building your equity

Because pre-construction condos typically have similar units throughout the building, carrying costs of every owner remains relatively the same. As they have similar lending, maintenance and mortgage rates.

When market value drops below a unit’s carrying cost, there will be a uniform increase in tenant fees across all units. With this strategy, you can keep covering your monthly expenses as well as guaranteeing constant occupancy.

They are steadier long-term investment

Monthly rent covers the principle accrued to the banks. With present low lending rates we can afford to borrow money at low rates and pay back constantly.

Consistency is gold in pre-construction home investments because rental pricing is unaffected by market fluctuations, as you are certain of your monthly earnings.

Search for the right projects that can yield higher returns than your monthly expense, a freshly built condominium in the right neighbourhood is almost immediately sellable because they do not require any renovations. 

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