An 11-Step Guide to Buying Pre-Construction Condos
Embarking on the journey of purchasing a pre-construction condo in Toronto requires careful planning and a strategic approach. In this 11-step guide, we'll navigate the intricate process, helping you achieve your real estate goals. Let's dive into the key steps that will pave the way for a successful pre-construction condo investment.
Step 1: Qualify Yourself
Define your real estate objectives. Are you seeking appreciation, cash flow, or diversification? Assess your desired level of involvement and evaluate your financial readiness. Access to savings can be a game-changer in the pre-construction market.
Step 2: Get Access to Top Projects
Visit PreConstructionCentral.ca and register to gain access to the top pre-construction condo projects in Toronto. Compare pricing, floor plans, locations, developers, and incentives to make informed decisions.
Step 3: Submit a Reservation Form
Express your interest by submitting a reservation form for the project that captures your imagination. This step grants you the right of first refusal and is a formality, not a commitment.
Step 4: Sign the Agreement of Purchase and Sale (APS)
Once you receive the desired floor plan for your preferred project, the developer will send you the Agreement of Purchase and Sale. Sign this document to solidify your commitment.
Step 5: 10-Day Due Diligence Period
Enter the 10-day due diligence period after signing the APS. Use this time to cross your Ts and dot your Is. Have your lawyer review the APS to ensure everything aligns with your expectations.
Step 6: Drop Off the Deposit
After signing the APS, it's time to bring your deposit and post-dated cheques to the developer. This step signifies your commitment to the project.
Step 7: Get Pre-Approved
Consult with your mortgage broker to secure a pre-approval. Most developers require this 60 days after signing the APS to facilitate their financing for development. Remember, the mortgage isn't registered until closing.
Step 8: Design Your Suite
As your unit undergoes construction, the developer will contact you to customize your suite. Choose finishes, colours, and upgrades that reflect your style.
Step 9: Interim Occupancy
Navigate the interim occupancy period after your unit is complete but before the condo is registered. Be prepared to rent your unit during this time and pay an occupancy fee.
Step 10: Leasing Your Unit
For investors, ensure that the APS allows you to lease your unit during the interim occupancy period. This can be a lucrative period for cash flow.
Step 11: Closing
The final closing takes place once the condo is registered as a corporation. Budget for closing costs, including development charges, land transfer tax, park levies, section 37, reserve fund, utilities hook-up, HST (with a rebate available), and more. Pre-construction closing costs can range from 5-8% of the purchase price.
