One of the biggest dilemmas in today’s Real Estate market is whether I should buy a pre-construction or a Resale. This question is more relevant to investors rather than end users. As end users, it’s a very clear and defined requirement, but when you are an investor, the flexibility is more as the decision is based on the return on investment, not the property’s personal needs.
There is a famous saying, “One shoe doesn’t fit all, “the same way it works in Real Estate. It all depends upon the individual, as every person has a different situation, and his way of functioning is other. Pre-construction or Resale for an investor is a big debatable topic; both have pros and cons. We need to do a deep dive into the investor’s portfolio, risk appetite, availability of funds, retaining power and long-term & short-term goal of investments.
As per the latest reports, Toronto’s new condos market soared at a rate of 33% and the resale housing market all across GTA has gone up by 15.4% as far as sales are concerned. There are limited options for the buyers or investors as the inventory levels are really low, keeping the market’s pace in an upward direction.
Now let’s focus on the real topic, Pre-construction vs. Resale. Based on my experience selling thousands of pre-construction and resale homes and condos, We will share our advice with you. If you feel more inclined towards pre-construction, buying a high-rise or condo is a good idea, but you have to be a little thoughtful about location and market dynamics in the area you are buying. Regarding Resale, purchasing a small investment house is always a good option. Both Resale and Pre-construction have their pros and cons.
- You immediately get possession within a few weeks.
- You can start making rental income directly.
- You can physically see the house.
- You are not worried about the cancellation of the project as you get your ownership faster
- It’s easy to resell as there are not many restrictions.
- You can always get a double dwelling unit in Resale for extra rental income.
- You can get the refinance after some time and can utilize the money for further investment
- Your mortgage payments start immediately after the closing
- You have to take the trouble to manage tenant
- House might need some repairs and maintenance
- All the down payment goes almost one time
- No leverage of time and money.
- Leverage of time and money.
- The down payment goes in parts.
- No mortgage is required immediately.
- Opportunity to sell on assignment.
- You get possession after a few years, and by the time your property appreciates.
- No hassles of tenants until possession of the property.
- No maintenance is required until custody; the least maintenance is after control as it’s new.
- You are buying the property on paper only.
- Fear of project cancellation as it’s a long gap between purchase and closing.
- The mortgage rate might change by the time when you get possession.
- No rental income until possession.
- Over competition at the time of possession as many units come together in the market.
- Many things depend on the builder in the purchase, so you have less control over the situation.
- Market conditions might change.
- Permit and other regulatory requirements for the builder.
We understand that it’s not easy for a seasoned investor to identify the right investment among so many available; we strongly recommend taking expert advice. Whether pre-construction or Resale, it’s a big decision, and you want to do it right.
If you are looking for a no-obligation one-hour session about How to build your Real Estate portfolio, please get in touch with Our Team, and we will steer you in the right direction toward achieving your goal of Real Estate investments.