Why Pre Construction Condos in Toronto are Smart Investment Choice?
By Condos HQ - May 01,2024
“Buy on the fringe and wait. Buy land near a growing city! Buy real estate when other people want to sell. Hold what you buy!” – John Jacob Astor
Alt tag for image – Pre Construction Condos in Toronto
While the desire to own a home runs deep for many, the practicalities of doing so in today’s market can be daunting—especially in a city like Toronto, where prices continue rising at a staggering pace. For those wishing to get their proverbial foot in the door of real estate sooner rather than later, buying into a Pre Construction Condos Toronto development early may be a savvy solution offering affordability and upside over the long run. Let’s explore why these types of ‘first-off-the-assembly-line’ properties hold considerable merit as investments.
Capitalize on Predictable Price Appreciation Traits
Long-term projections indicate the Toronto area housing market will only continue appreciating in value over the coming decades, with annual average increases between 3-6% depending on location and other factors. While past performance never guarantees future returns, statistics prove this region’s real estate climate has rewarded patient ownership tremendously. According to CREA, the average listing price for all residential property types in the Greater Toronto Area rose by a massive 22.4% year-over-year in 2022 alone!
Pre-construction condos present a sensible means of betting on—and benefiting from—sustained metropolitan growth. Locking in today’s pricing allows unit purchases to be well below projected valuations at occupancy several years down the line. Plus, new developments command a natural premium as the ‘shiniest objects’ in their areas that hold strong resale appeal. Location is also key—focus on sites with the potential for increased walkability, transit and density over time.
One can quite reasonably foresee $100,000+ gains, if not several times that materializing from pre-construction investments patience sees through until development completion. Particularly for families seeking homes rather than speculation, the possible long-term wealth creation far outweighs perceived risks around timing markets or construction delays.
Leverage Flexible Financing Terms
Alt tag for image – Long term investment profit with Condos in Toronto
Extended payment plans give Pre Construction Condos in Toronto buyers breathing room to save deposits over 18+ months versus making 20% lump sums on resale properties. This gives buyers more time to save.
Use capital elsewhere: By deferring 50% or more of costs until occupancy, buyers can keep their money working through other investments in the interim.
No impact on credit: Since pre-construction purchases are treated as future assets, associated debt doesn’t impact present borrowing power. This frees up qualification for additional mortgages, loans or lines of credit.
Revenue properties possible: Utilizing pre-construction properties allows purchasing cash-flow generating investment properties with debt. Rent can then offset condo payments from day one.
Benefit from Significant Tax Breaks
Buying new condos intended for rental purposes enables depreciating construction costs and financing interest expense as tax write-offs each year. Capital gains from eventual resales also attract favorable long-term capital gains treatment of just a 50% inclusion rate versus 100% for non-principal properties.
Canadian law also allows deferring capital gains taxes entirely by reinvesting sale proceeds in similarly priced replacement properties under the “Change in Use” and “Rollover” provisions. This permits compounding wealth exponentially over generations within family ownership structures.
Personalize Finishes and Layouts
Being involved from the blueprint stages onwards affords greater customization prerogatives than buying a resale. New Luxury Condos for Sale in Toronto developments usually offer several interior packages to select from, plus opportunities to upgrade certain fixtures, appliances and finishes that suit buyers’ long-term preferences and needs perfectly.
Key decisions around itemizing investment outlays or expensing them can also be made strategically in tandem with tax and legal advisors early in the development cycle. Enjoying input brings a sense of ownership few resale property shoppers experience right off the bat.
Benefit from New Construction Warranties
Buying pre-construction ensures access to mandatory Tarion warranty protection plans on structural defects and mechanical systems. These safeguard investments for years post-occupancy by providing recourse should issues like plumbing leaks, foundation shifting or electrical malfunctions arise.
While not a replacement for proper due diligence, such assurances offer greater peace of mind—and help preempt potential for getting stuck with costly surprise repairs—than buying “as-is” resale properties where warranties may only cover recent renovations. This positions pre-construction condo purchases favorably from risk-management perspectives too.
Enjoy Comprehensive Resort-Style Amenities
Alt tag for image – Toronto New Condo Developments
Rather than solitary units, the majority of new upscale Toronto New Condo Developments being delivered today offer extra planning factors scarce in traditional resale markets.
New condos aim to provide resort-calibre amenities onsite rather than relying on off-property facilities:
Rooftop terraces and lounges
Indoor/outdoor pools
Co-working and meeting spaces
Party and entertainment rooms
Movie theaters and game areas
Golf and sports simulators
This ‘resort within the city’ lifestyle appeals greatly to mobile professionals and DINK (double income, no kids) singles seeking low-maintenance, turnkey living. Pre-construction allows getting ‘in on the ground floor’ of such developments with a wide scope of attractions.
Gain Access to Insider Deals for New Condos in Toronto
Working directly with new development real estate professionals like Condos HQ affords VIP buyer perks unavailable to the masses by scanning and researching random project. Industry professionals tap their relationships to secure buyer allocations for in-demand sites before general launch, pocketing hefty early-bird incentives in the process—perks like deferred deposits, free parking, appliance packages or design studio credits worth thousands.
The right agent makes all the difference in lining clients’ pockets on the front end—let alone the appreciation realized later as projects fill out. If well-vetted deals ever present themselves off-market, it’s usually those with direct industry ties who hear of them first and pass golden opportunities along selectively.
Make Strategic Location Bets Early
Picking properties in areas just beginning gentrification curves allows investment in locations standing to appreciate the most drastically in the coming 3-5 construction years and decades beyond. Factors like proximity to emerging office & retail nodes, transit corridors undergoing expansion or demographic tailwinds towards certain regions enhance probabilities for outperformance.
With the right local market expertise, pre-construction investments can get situated smartly to benefit from escalating ratios of supply relative to the multiplying demand slated for those zones. Maximizes chances to capture amplified price bumps or rent potential down the road.
Summing It Up
The affordability and flexibility that pre-construction condo markets provide—combined with their statistical tendencies for sizable long-term appreciation aligned with urbanization—make them a sensible choice for owner-occupants wishing to establish real estate footholds or investors seeking inflation hedges in Canada’s strongest urban economies.
Buying newly built removes question marks resale properties carry and allows beneficiaries of an entire ownership cycle’s worth of potential gains collection. With smart developer and location vetting aided by a knowledgeable buyer’s agent, pre-construction properties listed by expert professionals like Condos HQ offer a well-positioned pathway for building family balance sheets steadily over the next market rotation and beyond.
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