Unlock Your Pre-Construction Condo Potential: 5 Tips to Consider!
A significant financial commitment and decision go into buying an investment property. However, pre-construction condominiums have grown to be a well-liked entry point for investors into the real estate market over time. This is so that they can invest with a down payment, and as the construction progresses, the value of their investment increases. As a result, by the time their building is ready for occupancy, their investment will have grown in value, and they will be able to start earning a passive income by renting out their apartment to tenants.
Although purchasing a condo before it is built can be a significant commitment, it is still a profitable long-term investment. Our team of platinum agents at GTA-Homes are dedicated to assisting you in locating an investment property that meets your needs and promotes the growth of your capital.
To assist you in making the best choice possible when buying a condo unit that is still under construction, we have distilled our list of essential advice down to just five points. So, whether you’re an experienced investor or a novice, you can use these tips to help you focus your search when looking for your next investment property.
Tip 1: Investing Where You Work!
People prefer to live close to their places of employment, so if you’re looking for a location to invest in real estate, keep in mind that tenants will prioritize homes in neighborhoods with high employment rates or those where new employment opportunities are anticipated.
The primary driver of the City of Toronto’s hot market is the desire to live close to important employment centers. Toronto is renowned for being a high-density area with numerous employment options in every industry. It follows that the high demand for housing there is not surprising. However, we are aware that due to Toronto’s high demand, prices can rise quickly and might not be affordable for all investors.
It is for this reason that we advise investors to consider locations other than Toronto, such as Vaughan Metropolitan Centre, Pickering, Waterloo, and more. For instance, Vaughan Metropolitan Centre, or VMC for short, has the largest growth projection out of the 25 Urban Growth Centres across the province. In the coming years, the VMC will see new transit, increased development, and an increase in population. Downtown won’t just be associated with Toronto any longer. Every city in the GTA will have its own downtown area, and the VMC is that area for Vaughan.
In the coming years, the City of Pickering will also experience significant growth. This location anticipates an increase of 8,300 people and 8,700 jobs by 2031 to reach its target of 13,500, according to the City’s official plan. In the upcoming ten years, these figures indicate a significant growth of about 165%.
Pickering and the VMC are excellent investment opportunities because local officials put forth a lot of effort to meet their targets for employment and population growth. These two growth hubs are merely two examples of how places other than Toronto will accommodate increased employment. However, because the land in these areas will be used to build complete communities where people can live, work, and play, all 25 urban growth centers will be able to accommodate new population and employment growth.
Tip 2: Easy access to public transportation.
The federal and provincial governments are spending billions of dollars to fund new transit infrastructure within the GTA because many tenants now prefer to commute to and from work and run errands using public transportation. Public transportation offers a lot of benefits. By reducing emissions released into the air, it improves the environment, relieves traffic congestion on the roads, and speeds commuters to their destinations. Investors should take advantage of this right away by buying a condo close to any type of public transportation.
Transit is a big plus for you because, in addition to making your condo unit more appealing to potential tenants, investing close to public transportation could increase the value of your property by 30% compared to investing elsewhere.
The various forms of public transportation to be on the lookout for include subway stations, GO Trains, and rapid transit systems, such as the Eglinton Crosstown LRT. Additionally, the Province recently approved a number of additional transit lines, including the Ontario Line, the Scarborough Subway Extension, the Yonge North Subway Extension, and the Eglinton West LRT. Tenants will be more likely to invest close to public transit because it will make it easier for them to get around quickly and conveniently, so by making investments in areas near these new transit lines, you are positioning yourself for success.
Tip 3: Amenities.
Because this is how your tenants will pass their time, condo amenities are a great way to draw tenants. Amenities will also increase the value of your condo unit in the future when you’re ready to sell it.
It may be tempting to find a pre-construction condo in a building with basic amenities because they are frequently less expensive than cutting-edge and distinctive amenities. However, keep in mind that amenities are an essential component of a condominium and that many tenants will search for condo buildings with amenities that suit their lifestyle. For this reason, a lot of builders will take the time to make sure that the amenities in their structure are appropriate for people of any age or lifestyle. Developers will also make sure that the amenities are furnished with modern features and finishes so that they are attractive to buyers. If you feel that the amenities appeal to you as a buyer, you can guarantee they will be attractive to tenants or future buyers.
Tip 4. Picking the Proper Layout.
Although there is no clear answer to the question of “which layout will work for me and my investment,” our platinum agents can give you advice based on your budget and the kind of tenants you want to draw in.
Particularly near office buildings, where many single professionals are looking to live, one-bedroom floor plans can make excellent rental properties. The best options for expanding families, however, are two or three-bedroom apartments. Your choice of floor plan will affect the kind of tenant who is most likely to want to rent your apartment. Therefore, it is best to choose a floor plan with more than one bedroom if you intend to rent your property to families. Consider the area in which you are investing as well. Consider investing in a location near a university or college as an example. Then you’ll probably draw students to your residence, or if you make investments in family-friendly neighborhoods, you might see more families looking for a place to live. Additionally, if you make investments in a region that is employment-driven, you might draw in young professionals.
Our final piece of advice is to make sure you select a floor plan for your condo unit that not only suits your needs but also your budget when you’re looking for one. The purchase price increases with the number of bedrooms and square footage you see in a floor plan.
Five: Rental rates.
Make sure your investment will generate a positive cash flow before you purchase a condo unit. To avoid making a costly mistake, every investor should check the current condo rental rates in the area they are considering. Your carrying costs, such as your mortgage, maintenance, and property tax obligations, should be covered by your rental rates. By examining current rental rates, you can get a good idea of both what rent prices are now and what they might be in the future. Just keep in mind that if you buy a condo that is still under construction, it won’t be ready for occupancy for three or four years, and by that time, the rental price will probably have increased. It is crucial to consider factors like employment growth, public transportation, retail expansions, and any new infrastructure, as well as development growth and other elements that may increase the rental rate in the future.
The COVID-19 pandemic is one scenario that might cause rental rates to decline in the future. As an investor, you should keep in mind that the rental market can fluctuate just like the housing market. Although there was a brief decline in rental rates during the pandemic’s height, they are now beginning to resemble pre-COVID levels. The market will not remain in this decline for long and will eventually increase back up at a similar rate as they once were, if not higher, so it is important to always keep this possibility in mind.
A great long-term investment is buying a condo that has not yet been built. However, having a plan in place is helpful because there are so many condo project options available in the GTA. You can find the ideal investment using these 5 suggestions. Remember that our platinum agents are also available to assist you at every turn. Connect with us right away for more details about condo investment opportunities!