Over the past 10 years, the popularity of buying pre-construction real estate has been well documented. Sometimes even an element of hysteria comes with the launch of new development. While lining up to buy a condo in a wave of hysteria is not recommended (homework and due diligence are still required). Here are 11 benefits of investing in pre-construction condo:
- Profit Potential
- Staggered Deposits
- Ease of Management and Low Maintenance Costs
- Proven Demand for Tenants
- An Affordable “cottage” (urban getaway or low-stress vacation property)
- Affordability and Liquidity
- Modern Architecture
- Modern Amenities
- Opportunity to Decorate to Your Unique Tastes
- New Technologies and Modern Construction
- Modern Layouts
1. Pre-construction Condo: Profit Potential
When you buy your unit in today’s dollars and prices, or at a discounted price, with a small investment you may stand to earn lots of profits tomorrow. If we look at the price growth in Toronto and Vancouver by examining the general price index of pre-sale condos, we see returns of as much as 400% for a unit purchased between 2001 and 2007.
2. Pre-construction Condo: Staggered Deposits
As an investor, you are leveraging a small amount of capital initially and the rest of the capital to be invested is spread over time, so you’re not putting down a substantial amount of money all at once.”
3. Pre-construction Condo: Ease of Management and Low Maintenance Costs
Condo buyers are more than willing to forego grass-cutting and snow-shovelling. With exterior maintenance taken care of by the property management company, condo owners get the benefits of convenience and fewer demands on their time.
Most of the costly items of maintaining a property are shared by multiple owners. The condo board should have an accurate and frequently reviewed plan for spending on maintenance and repairs. Most owners are not involved in the day-to-day grind of maintaining landscaping or dealing with major repairs directly. Other than minor suite issues, most condo owners have a turnkey property.
4. Pre-construction Condo: Proven Demand for Tenants
Renters will pay a premium to live in high-quality units with terrific amenities over living in purpose-built rental buildings that may be older and poorly maintained. All things being equal (location, amenities, etc.), tenants would prefer being in newer buildings rather than resale.
5. Pre-construction Condo: An Affordable “Cottage” (Urban Getaway or Low-stress Vacation Property)
Downtown cores of many cities across North America are being revitalized, offering many terrific attractions for families living in the suburbs. “Restaurants, theatres, concerts, sporting events, museums and shopping are to be found within walking distance of many condo developments, and the added population density that condos bring has the effect of increasing the attractions available. Owning a condo makes perfect sense to families who have a more urban lifestyle and want to be “closer to the action”—there is also strong resale potential for well-located condos.
6. Pre-construction Condo: Affordability and Liquidity
Condos are usually built in urban centres where people can be close to transit, shopping, entertainment and work. We instinctively know that neighbourhoods that provide many opportunities for people to live, work, play and move around will always be in high demand by buyers. This is why people get excited about buying a condo; they know they can easily resell it if their circumstances change.
In addition, because of the smaller size of most condos compared to single-family homes, and the economies of scale, builders can offer many different pricing options to attract a large pool of buyers seeking an affordable place to live.
7. Pre-construction Condo: Modern Architecture
The visual, psychological and physical effects of living in a neighbourhood of architecturally stunning buildings are profound. Beautiful buildings, properly integrated into a neighbourhood, are anchors in a community. The look of buildings creates a sense of place and an identity for residents. Buildings with poor architecture can make a neighbourhood desolate, attracting crime and decay.
8. Pre-construction Condo: Modern Amenities
Condo developers have the benefit of using foresight when designing a great building. With amenities in particular, developers can look at previous buildings to see what works (pet facilities, basketball courts, video-game rooms) and what doesn’t work (rock-climbing walls).
Amenities are one of the great benefits of owning a condo. How else can someone afford to have a squash court for their own? It would be better to share the costs with many owners who can also share the use.
Popular modern amenities include:
- Theatre rooms
- Multimedia rooms
- Quiet study rooms
- Shared TV and internet use rooms
- High-end coffee lounges
- Swimming pools
- Health clubs
- Pet-grooming facilities
- Sun decks
- Dance, yoga studios
- Massage tables
- Pedicure facilities
- Enhanced security and concierges
9. Pre-construction Condo: Opportunity to Decorate to Your Unique Tastes
Buying from floor plans gives you the unique opportunity to make changes that would be impossible or costly if performed after construction. Converting a three-bedroom suite into two larger bedrooms, or eliminating small balconies to give you more indoor space, are examples of what can be done to customize your living space.
In addition, buyers like to choose their own finishes and colours. Knowing that something is designed the way they want it on the first day they walk in will appeal to many buyers, who might otherwise spend $15,000 or more on cosmetic renovations.
10. Pre-construction Condo: New Technologies and Modern Construction
Building codes and energy efficiency standards change over time, so when you purchase a new home, you are also buying a property that should be the most up-to-date in terms of plumbing, electrical, materials, energy efficiency and building practices.
11. Pre-construction Condo: Modern Layouts
Have that old crusty dining room in your home that no one uses? Well, you may if you bought a home built prior to the 1980s. Today’s floor plans feature more usable and fluid spaces that are more enjoyable and tuned to the modern family’s lifestyle.
Open-concept floor plans, with spaces naturally separated according to use rather than with walls, allow for a condo to be smaller without feeling smaller.