The Manhattanization of Toronto is occuring right now as rents continue to climb. When rent control was implemented, there was a side effect of reducing supply. And due to affordability condos are the new First Time Home Buyer property, not to mention the growing retiree demographic needs to downsize. Those who position themselves now will be the new condo millionaire.
As buyer agents we look out for your interests, not the builder's. To ensure we protect you we only work with experienced senior developers like Tridel, Great Gulf, CentreCourt, and Menkes to name a few.
THE PROCESS
Buying pre-construction real estate is a bit different than putting on offer on an existing property. Here's how the process typically works:
The builder reaches out to select brokerages to share "early access" to a new pre-construction release.
There is usually a fairly short period of time (usually a week or so) where information is released. Things like floor plans and prices are shared during this time. Occasionally the builder holds these things back until they gauge demand and releases them on a set day all at once.
You express interest by filling out what's called a "worksheet" that is submitted by us to the developer, with details of your preference.
The developer will allocate a unit(s) to you, if you are satisfied you have 24 hours to complete a full Purchase & Sale Agreement and provide the post dated deposit cheques.
In Ontario there is a 10 day "cooling off period" after signing which allows you to change your mind and walk away for any reason (and get your deposit back).
Typical phases in the process, depending on the height of the tower, are:
Pre Construction Sales [0.5-1 year]
Construction [2-3 years]
Occupancy [0.5-1 years]
Building Registration - You Take Ownership
DEPOSITS
Typical 20% extended deposit structure is 2.5% every few months. Since builders need to sell 70-80% of units before they can put a shovel in the ground, they offer amazing incentives early in the sales process. Your deposit is held in trust with a lawyer until construction commences.
assignments
You don't own a property until the building is registered. Until then, you own a contract, and depending on the builder you may sell your contract, or ASSIGN it, to a third party who takes over as if they originally purchased with the builder. Sort of a swap out. So if your life plans change over the construction term you are not committed to closing. Assignments are usually sold at a premium, and in the right location can be handsomely profitable.
RIGHT TO LEASE DURING OCCUPANCY
Key to your investment is the right to lease out your unit during the occupancy phase. As you don't own the unit yet, with this privilege you are permitted to rent out the condo to a third party, who will pay the carrying cost.
Costs to be Aware Of
New Construction comes with one additional cost not found in resale, similar to how a new car comes with extra costs, these are Levies passed down from the city to the builder, who passes it on to you. Luckily these are usually capped in the purchase contract. If you are an investor, you should also be aware of the HST Rebate, which you need to apply for after purchase.
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