If you live in Toronto, I’m sure you are familiar with the term ‘pre-construction.’ With a constantly evolving supply of new projects launching and keeping up with all of the pre-con options can be overwhelming.

It is important to be diligent and research the many pre-con projects until you find the one that fits your needs. Before you invest any money, these are the most important factors to consider!

Location

Thoroughly research the neighbourhood and the surrounding buildings before you purchase. Check how the neighbourhood has grown over the last five years. Ask yourself, is this area popular? Look at supply and demand trends for the area. This will help you determine the future growth of the unit by occupancy date.

Payment Structure

Down payments for pre-construction vary by each project and are quite different than a standard resale mortgage. Each developer decides on how the deposit payments will be structured. Take a close look at the payment schedule and consider your timeline.

Timelines

How long will it take to complete the project? When will you get the keys? How much time are you allowing for changes and disruptions? Typically the date that projects are projected to complete by and extended by the builder during the construction phase. If your timing isn’t flexible too then this can be a challenge.

Developer

Investigate who you are working with. Take a look at other projects they have worked on. This will help give you an idea of the quality and cost of your investment. Tip – larger developers tend to produce higher quality builds due to extra resources and expertise.

Evaluate

When selecting the right unit, look at the variability in the prices. Depending on the building, a two-bed might be priced more competitively than a one-bed in comparison to current prices. Also, typically the suites increase in price there higher the floor you buy on.

Extras

What incentives are you being offered? Are you allowed to assign your unit upon occupancy? Are your development fees capped? Is the builder offering upgrades on interior finishes if you purchase by a specific date? Compare the extras that you are being offered for each build.

Things to look out for if you are making a new pre-con investment:

Past lawsuits

Check if your developer has ever been sued over a past project.

Cancellations

Check if your developer has canceled projects in the past.

Inexperience

If you cannot find any past projects or history of the developer, it might mean that they lack experience. As a first-time investor, you may want to stay away from projects like these.

If you need help navigating a new investment, don’t hesitate to ask even the most basic questions. We are happy to help you understand how the pre-construction purchase process works from start to completion. And as always we’re here to help you get the best bang for your buck, especially when it comes to pre-con projects!