It has become a pre inferred, that investing in pre construction condos will offer a handsome return. But consider every aspect of the investment, before you jump into a conclusion. Many have made a profit in investing under construction condos, not for accommodation but with the perspective of renting or selling it out when the price appreciates considerably. Too many are accepting this notion, without studying the pros and cons of it. Like every other financial investment, real estate investment requires a tepid and cautious approach.
The market is always sensitive to price, but the pre construction condo market seems otherwise. As per Urbanation, average sq. ft price of pre construction condos was $967 against $737 completed units in 2019. This implies under construction condos were 30% expensive than finished, resalable units. Investors often overlook this disparity. This factor is discounted d as buyers pay a minimal down payment, and expect an appreciable appreciation in a few years, while the building is being completed. But the high price is a deterring future appreciation. Find a triplex for sale in Toronto which is reasonably priced and completed.
May potential investors buy pre construction condos with a view to let it out. You get a good idea of the prevailing rent rate when you buy a finished, habitable apartment. You get a correct idea, by noticing existing rent in the neighborhoods. With pre-construction condos, you will have a projected figure, which may not get in the future. Some ask for $4,000 rent per month for a one-bedroom apartment, which is unrealistic. They justify this rent, stating they acquired the condo at a stiff price. A pragmatic expectation is key to a successful business plan.
Patience is a great virtue.
If you buy a finished condo, and real estate price drops significantly in the following years. If you can pay mortgage installments, then hold on to the property till the price reverse. From the long term, respective the condo will fetch a good return. This feature was witnessed in Oakville in the Halton area in greater Toronto when buyers paid a stiff price in 2017 to witness a landslide in the real estate market. Price is a bit subdued in real estate due to the pandemic crisis; it is an excellent opportunity to buy a resale housing unit. If you have a disposable resource and willing to take a calculated risk, resale apartments are a perfect investment opportunity. A fair number of completed apartments are quoting underpriced, which provides a remarkable chance of future appreciation.