If this is 5 years ago, I might tell you that presale condos are a good way to create fast equity. By the time the building was finished, many investors had made a tidy profit, but things have changed since then.
Here are some things you should know about buying presale condos:
1. Investors were smart, but developers have also gotten smarter by raising the prices of presale condos to match resale condos in the same area.
2. The Canada Revenue Agency as been cracking down on condo owners, so if you try to sell, it can be shocking to learn that you have to pay HST if you didn’t occupy the unit.
3. Unlike with resale condos, you don’t know when presale condos will be finished. The developers can gave you dates, but there have been many cases of delayed construction and even abandoned projects.
4. Before the building is registered, you have to pay an Occupancy Fee. This is a combination of maintenance fees, property taxes and interest from any unpaid balance. Be aware that this fee does not go towards your mortgage, hence it’s other name – the Phantom Rent.
With resale condos, you won’t have to deal with these uncertainties. You get what you see and you know exactly when you can move in.
If you must buy a presale condo, make sure you understand all the details and get help from a qualified real estate agent. A good agent can tell you about the developer’s previous buildings, how good they are with meeting construction deadlines and current market values so you can make an informed decision.
Have a question about buying a presale condo? Just ask.