Buying pre-construction condos can be very profitable for you. But it can be a stressful option and is definitely not for the faint of heart. If you do your research and understand your objectives, your purchase can work strongly to your advantage. Do your due diligence by considering all of the items noted below. There are several advantages to buying pre-construction condos:
The power of leverage, you buy in the present with little down and the building (at least theoretically) appreciates in value;
Your financial situation may not be the greatest today, but by the time it's ready to close the dea, you should be in good shape;
You get a brand new home;
Pay today's prices for future value;
If you buy early enough in the sales process, you get a wider selection of floorplans to choose from. Also, a Realtor will most likely be able to get you your desired unit at a better price and incentives (most builders offer select units with incentives to Realtors first);
You can often upgrade and improve and differentiate your unit from the others and these changes are usually much less expensive during construction than after.
There could be many other unknown elements that may be unique to your circumstances.
There are also some things to watch out for, including:
Buying new means paying the government HST - it's 13% (in Ontario) now (and you often get a % rebate);
Your deposit could be tied up in this project for more than three years; compare your likely return to that of the other options out there. Your money might be safer and better to sit in a high interest savings account (?);
Floor models, detailed floorplans, and great marketing can never truly represent the final product you are purchasing;
Will it be ready when the builder says it will be ready? You should be prepared for delays;
If you intend to assign (sell the contract to another purchaser) your property, you need the builders permission (ask for an assignment clause). Also, there is often an assignment fee applicable. Also, if you assign your contract, if the assignee is unable to close (get financing), you may still be responsible for financing (please get a legal opinion);
If you plan to rent the unit out - If you have signed a lease with a tenant and it is timed to start on a specific date, you may end up being responsible for providing them with a place to live if that occupancy date gets delayed;
Deficiencies – Deficiencies identified during the pre-delivery inspection could take time to fix (by the builder). All reputable builders will eventually fix them, but on their own schedule. Their schedule may or may not make a tenant (or you) very happy.
To summarize, I think if you have done your research/due dilligence and have a good Realtor who can help you through the process, you’ll most likely do well.