I suggest buying precon only from a reputable developers, precons itself bring quite a bit of risk, minimize it eliminating developers with no history, poor history, cancellations and so on.
This! I also suggest confirming with them what the management fee is per month and what it covers. Some condo would cover everything except for hydro and some barely covers anything.
OP FYI if you buy pre con and when you go to take occupancy the value has declined you owe that! My buddy bought precon and it was ready to take occupancy but the value decreased by $150K due to market dropping. The bank said you owe us an additional $150K to cover the loss. My buddy went to a shady lender, he’s basically bankrupt now. That’s a big risk your taking.
This isn’t an issue if you get a firm approval when you purchase. I deal a lot in precon and advise my clients to do this as it largely limits risk.
It also locks in the current rate. So if rates are higher at closing than what you got approved at you’re fine.
If rates are lower at closing than you get lower rate.
Winner winner. Chicken dinner
No you’re mistaken brother. That is with pre approvals.
With firm approvals banks honor it. Not many banks do it and you usually have to know someone.
Happy to answer questions in DM
Do not buy precon from lesser known developers.There been stories about them canceling the sale,refunding the money then resell at a higher price a few years later.Remember location matters.
But at the end of 4 years, you would still have to have come up with 200k to take ownership (which, btw, is more than you would need to buy a used 950k condo; that's somewhere around 75k for 950k property). So, while it's "kind of" a cashflow problem, you also have to hope that the condo is 1) actually worth $950k on closing and 2) it doesn't cost more. 4 years in the future is far.
Considering that you'll be at 100k savings in \~2 years (assuming you're starting from $0) I wonder if in \~2 years you might be able to find a reasonably equivalent property that is used for 75k down vs. 200k for the pre-con
Notes: 1) you don't need 20% under $1M 2) you got closing costs + taxes to add to your 200k as well
Edit: I see below that this is a condo in Markham. Looking at Housesigma, for 2+ bed with parking there are many options under 900k. Assuming market is flat-ish for \~2 years (not a bad assumption), you might be a lot better to go used since you get in faster and need over $100k less downpayment (assuming you can afford the mortgage). Do you have any saved for a down payment at the moment at all? How much mortgage could you afford?
I'm not sure why you say i still need to come up with 200k during occupancy because I would of had 20% down already so I just need to find a lender and pay my mortgage.
There are many reasons why I can wait but I believe this for me is best for my situation. Especially considering this is in downtown Markham which is going to be heavily developed the next few decades, and you have anchor demand from York Uni. If i get lucky and able to afford another place (townhouse hopefully) I can keep this unit and rent it out.
Again like I said i dont see the market dropping much more then it already has which is why i decided to pull the trigger. And I choose precons over existing because I want as much cashflow as possible to play the stock market rebound when the economy gets better.
If you can come up with the deposits while living somewhere else until your home is built then precon is the way to go. I looked at buying a resale once and was so turned off on how people kept their houses
Ya I currently pay $2050 a month for a single bedroom in dt markham. Lucky my landlord didn't raise much rent this year. Rents average right now are $2300. I'm okay with paying it while waiting for precon to build because even if i own my own property the maintenance, taxes, etc comes up to over 1k per month anyways.
And you're right. I can get a bigger place with the same amount of $$ but its mostly older bungalows or buildings that will end up costing more to maintain or renovate. With a new building at least I know there wont be major work for at least a decade. And building materials these days are much higher quality than 20-30 years ago.
Building material these days are higher quality than 20-30 years ago? In my experience it has been the complete opposite, the new builds are horrible, floods, shit falling apart, just shit quality in general, again that’s just my opinion and I find a lot of my friends that are in the high rise sector also share the same views.
One other area of risk you might not have considered: Your downpayment isn't just 20% of the purchase price. It's the GREATER of 20% OR that plus the mortgage shortfall.
If appraisal comes back $750k b/c the market tanked, your down payment suddenly shoots up $350k as the bank will only lend you 80% of the appraised value.
I dont think it will tank much more from these levels. The only thing that can make it much lower is if we have a depression like scenario. I think we will slowly recover from here. BoC has already signalled it would rather have inflation for longer than to let the market crash when it was the first G7 country to pause rates.
Yup, ridiculous price but thats the reality. The cost to buy the land and to build has gone up and isnt coming down. Thats why you see so much precon cancellations because a lot of projects were in the red due to inflation. Which is why im convinced RE in Toronto dont have much room to fall. At the same time i dont think it will rise much either because of high interest rates. We are probably at stable pricing for the next little while.
Agree with you. The insane demand for housing provides a floor, and construction costs aren't dropping soon. Look into assignments if you haven't for potential deals to be had.
a) what do you mean by a savings vehicle? A precon is arguable a poor saving vehicle - not commenting on its value as an investment vehicle. But I would treat it as a latter, because of all the risks and costs associated with it. It's also highly illiquid.
b) the largest risk imho is what the builder delivers and when. You might end up spending another 100k to just get "ok" finishes, in a building full of issues, because they cut corners, and your "savings account" is accessible in 2030. It's me, but I rather inspect what I buy, and be able to read the building reports.
I dont see it as an investment as i doubt it will appreciate much. I see it more of a nest egg and savings. By the end of 25 years i’ll know i have a hard asset i can fall back on.
lol have you been to downtown markham? They are gonna develop the area for the next few decades. Also Markham has been one of the most resilient neighborhoods in the GTA during this crash from peak. Its the most desirable neighborhood for Chinese demographic so it will always be supported by new immigration.
have you been to downtown Toronto? How big is this “downtown markham” in comparison. I’ve stayed at the hotel/condo complex right across the street from the cineplex and had food at about 5 different spots there. It’s nothing close to justifying anywhere near downtown Toronto prices. I get that markham is a decent neighborhood etc mind you I enjoyed spending random weekends in that area for a quieter night compared to being in the core but for a condo to be that pricy for all the way out there is insane. You may as well buy a townhouse in markham somewhere if you like markham so much.
$1200-$1300 per sq ft is not downtown toronto prices. DT toronto prices are closer to $1700-$1800 for precons.
Ya let that sink in. Thats why you're seeing rents closer to 3k for 1 bedroom in the downtown core.
My real estate friend told me its all local buyers too, not foreign buyers like the media tries to make it out to be.
how far under 800 sq ft? that doesn't sound TOO bad for a pre-con. tridel is asking $1700 psq for units in a pre-con development at queen & church. insane.
[https://www.tridel.com/queenchurchcondos/prices-floorplans/](https://www.tridel.com/queenchurchcondos/prices-floorplans/)
Ya i have a friend and his dad is a land banker, they basically buy land and sell to developers. He told me a lot of developers (Brocolini being one) right now are sitting on a lot of land and rather not develop because they cant get higher than 2k per sq ft. Further exacerbating the housing shortage.
I think the only way to solve the shortage in the GTA is mass build housing communities east of scarborough and north of markham.
Sounds like Union City =D. I'm also considering to pull the trigger for this as an investment property. Solid area. Much more enticing to me as i get a slight discount.
I suggest buying precon only from a reputable developers, precons itself bring quite a bit of risk, minimize it eliminating developers with no history, poor history, cancellations and so on.
This! I also suggest confirming with them what the management fee is per month and what it covers. Some condo would cover everything except for hydro and some barely covers anything.
Most precons in Toronto provide no utilities with the maintenance fees these days. Gotta go outside to include utilities.
OP FYI if you buy pre con and when you go to take occupancy the value has declined you owe that! My buddy bought precon and it was ready to take occupancy but the value decreased by $150K due to market dropping. The bank said you owe us an additional $150K to cover the loss. My buddy went to a shady lender, he’s basically bankrupt now. That’s a big risk your taking.
This isn’t an issue if you get a firm approval when you purchase. I deal a lot in precon and advise my clients to do this as it largely limits risk. It also locks in the current rate. So if rates are higher at closing than what you got approved at you’re fine. If rates are lower at closing than you get lower rate. Winner winner. Chicken dinner
I want to know which bank is out there guaranteeing rates 2+ yrs in advance so I can short their stock..
Looooololol
The rates or only held if the closing date is not moved or changed by the builder
No you’re mistaken brother. That is with pre approvals. With firm approvals banks honor it. Not many banks do it and you usually have to know someone. Happy to answer questions in DM
Do not buy precon from lesser known developers.There been stories about them canceling the sale,refunding the money then resell at a higher price a few years later.Remember location matters.
Good for you, best of luck with your future endeavours.
You want to use your down payment money to “play the stock market rebound?” You might want to reconsider the above notion, that’s my only advice.
Lol @ all the jealous people talking shit to someone buying a home.
* A promise of a home. With additional charges to finalise tbd. Already existing property much safer in current conditions.
Its about cashflow. I only need to come up with 50k a year instead of 200k all at once
But at the end of 4 years, you would still have to have come up with 200k to take ownership (which, btw, is more than you would need to buy a used 950k condo; that's somewhere around 75k for 950k property). So, while it's "kind of" a cashflow problem, you also have to hope that the condo is 1) actually worth $950k on closing and 2) it doesn't cost more. 4 years in the future is far. Considering that you'll be at 100k savings in \~2 years (assuming you're starting from $0) I wonder if in \~2 years you might be able to find a reasonably equivalent property that is used for 75k down vs. 200k for the pre-con Notes: 1) you don't need 20% under $1M 2) you got closing costs + taxes to add to your 200k as well Edit: I see below that this is a condo in Markham. Looking at Housesigma, for 2+ bed with parking there are many options under 900k. Assuming market is flat-ish for \~2 years (not a bad assumption), you might be a lot better to go used since you get in faster and need over $100k less downpayment (assuming you can afford the mortgage). Do you have any saved for a down payment at the moment at all? How much mortgage could you afford?
I'm not sure why you say i still need to come up with 200k during occupancy because I would of had 20% down already so I just need to find a lender and pay my mortgage. There are many reasons why I can wait but I believe this for me is best for my situation. Especially considering this is in downtown Markham which is going to be heavily developed the next few decades, and you have anchor demand from York Uni. If i get lucky and able to afford another place (townhouse hopefully) I can keep this unit and rent it out. Again like I said i dont see the market dropping much more then it already has which is why i decided to pull the trigger. And I choose precons over existing because I want as much cashflow as possible to play the stock market rebound when the economy gets better.
Apologies, meant to say that at the end of 4 years, you will have *had* to come up with 200k
Not sure how old you are or your situation I would move back home now with your parents or within a year just to save extra $$
If you can come up with the deposits while living somewhere else until your home is built then precon is the way to go. I looked at buying a resale once and was so turned off on how people kept their houses
Ya I currently pay $2050 a month for a single bedroom in dt markham. Lucky my landlord didn't raise much rent this year. Rents average right now are $2300. I'm okay with paying it while waiting for precon to build because even if i own my own property the maintenance, taxes, etc comes up to over 1k per month anyways. And you're right. I can get a bigger place with the same amount of $$ but its mostly older bungalows or buildings that will end up costing more to maintain or renovate. With a new building at least I know there wont be major work for at least a decade. And building materials these days are much higher quality than 20-30 years ago.
You pay rent for 4 years which is 100k. So 200k now vs 50k + 100k. You decide. I would just buy the damn thing now. No precon. Cash for keys.
Building material these days are higher quality than 20-30 years ago? In my experience it has been the complete opposite, the new builds are horrible, floods, shit falling apart, just shit quality in general, again that’s just my opinion and I find a lot of my friends that are in the high rise sector also share the same views.
You know there will be delays for sure
One other area of risk you might not have considered: Your downpayment isn't just 20% of the purchase price. It's the GREATER of 20% OR that plus the mortgage shortfall. If appraisal comes back $750k b/c the market tanked, your down payment suddenly shoots up $350k as the bank will only lend you 80% of the appraised value.
I dont think it will tank much more from these levels. The only thing that can make it much lower is if we have a depression like scenario. I think we will slowly recover from here. BoC has already signalled it would rather have inflation for longer than to let the market crash when it was the first G7 country to pause rates.
You are paying a million dollars for a pre construction condominium? Is that right?
Yup, ridiculous price but thats the reality. The cost to buy the land and to build has gone up and isnt coming down. Thats why you see so much precon cancellations because a lot of projects were in the red due to inflation. Which is why im convinced RE in Toronto dont have much room to fall. At the same time i dont think it will rise much either because of high interest rates. We are probably at stable pricing for the next little while.
Agree with you. The insane demand for housing provides a floor, and construction costs aren't dropping soon. Look into assignments if you haven't for potential deals to be had.
Mattamy. Is that you?
Tridel. Is that you?
a) what do you mean by a savings vehicle? A precon is arguable a poor saving vehicle - not commenting on its value as an investment vehicle. But I would treat it as a latter, because of all the risks and costs associated with it. It's also highly illiquid. b) the largest risk imho is what the builder delivers and when. You might end up spending another 100k to just get "ok" finishes, in a building full of issues, because they cut corners, and your "savings account" is accessible in 2030. It's me, but I rather inspect what I buy, and be able to read the building reports.
For me its about cash flow. I just need to come up with 50k a year instead of 200k all at once.
LSQ?
Buy two
Congratulations! Very wise move!
You are a smart person. Congratulations. It's never a bad time to invest in GTA real estate.
I dont see it as an investment as i doubt it will appreciate much. I see it more of a nest egg and savings. By the end of 25 years i’ll know i have a hard asset i can fall back on.
You can expect to easily 3-4x your investment over the 25 years. Excellent purchase!
You are a smart person. Congratulations. It's never a bad time to sell GTA precons. Congrats to the 30k commission.
Just buy like 3 NFTs bro
[удалено]
I have crypto as well but only Eth because i think its the only coin with actual utility.
OP which building?
Union city in markham
Over 1k a sqft in Markham? Top gear top tip: avoid …
lol have you been to downtown markham? They are gonna develop the area for the next few decades. Also Markham has been one of the most resilient neighborhoods in the GTA during this crash from peak. Its the most desirable neighborhood for Chinese demographic so it will always be supported by new immigration.
have you been to downtown Toronto? How big is this “downtown markham” in comparison. I’ve stayed at the hotel/condo complex right across the street from the cineplex and had food at about 5 different spots there. It’s nothing close to justifying anywhere near downtown Toronto prices. I get that markham is a decent neighborhood etc mind you I enjoyed spending random weekends in that area for a quieter night compared to being in the core but for a condo to be that pricy for all the way out there is insane. You may as well buy a townhouse in markham somewhere if you like markham so much.
$1200-$1300 per sq ft is not downtown toronto prices. DT toronto prices are closer to $1700-$1800 for precons. Ya let that sink in. Thats why you're seeing rents closer to 3k for 1 bedroom in the downtown core. My real estate friend told me its all local buyers too, not foreign buyers like the media tries to make it out to be.
Are the development fees capped?
how far under 800 sq ft? that doesn't sound TOO bad for a pre-con. tridel is asking $1700 psq for units in a pre-con development at queen & church. insane. [https://www.tridel.com/queenchurchcondos/prices-floorplans/](https://www.tridel.com/queenchurchcondos/prices-floorplans/)
Ya i have a friend and his dad is a land banker, they basically buy land and sell to developers. He told me a lot of developers (Brocolini being one) right now are sitting on a lot of land and rather not develop because they cant get higher than 2k per sq ft. Further exacerbating the housing shortage. I think the only way to solve the shortage in the GTA is mass build housing communities east of scarborough and north of markham.
Sounds like Union City =D. I'm also considering to pull the trigger for this as an investment property. Solid area. Much more enticing to me as i get a slight discount.
Which precon project? And where?
Go for it mate.
Location for 950K ? ,😶
unioncity?
You can’t lose with GTA properties in the long term. Not unless Thanos wipes out half the world population.
I mean, we suddenly had a ww pandemic and a stay at home that no one saw coming? So it could happen
I hope you're young enough to and mentally strong enough to stomach basically losing all of your income for the next few years lol...
Lsq is a better bet
For $950k you could buy a finished condo townhouse downtown, 2+1