What is a Condo or Condominium?
A condo is an individual residential unit within a community of units. It does not refer to a construction style but is a form of legal ownership, where the owner typically owns just the condo’s interior. Condominiums are corporations whose units are privately owned and whose common elements, such as elevators and hallways, are owned by all the condo members.
Why are Condos Attractive to Investors?
If shovelling snow or mowing the lawn is not your cup of tea, condos may be your choice. A monthly maintenance fee assures owners fewer repair responsibilities and access to on-site amenities, including security features. With condos available in varied sizes across a wide price range, investors can use their equity instead of taking on another mortgage. You can contact our experienced realtors at our brokerage and get the best expertise in condos at your fingertips. Just fill in your contact information in the form below, and we shall contact you.
“Pre-Construction condominiums” refer to new condos in the planning stage, under construction or recently completed, and usually purchased from a developer. The main advantage of buying a pre-construction Condo while under construction is that it is cheaper than a resale condo. Investors buy property at a time when the area is not as developed, and real estate values are highly likely to go upwards. Though there is no guarantee that the market will continue to rise during construction, earnings can be quite lucrative. With a waiting period of 2 to 4 years before possession, investing in a pre-construction condo allows you ample time to get your finances and preferences in order. Some other advantages are as follows:
- A pre-construction condo allows you to enter the property market at lower prices. Many builders allow the down payment (20% of the purchase price) in smaller installments of 5% or 2.5% each, spread over 2-4 years.
- There are no maintenance charges, mortgages, or property taxes to be paid until the completion of the project.
- Being the first owner, you can customize the interiors of your property, such as appliances, furniture, and floor plans. Many home buyers prefer new apartments because they can take control of all upgrades.
However, buying a condo before construction begins can be risky because you are purchasing a property that has not yet been built, and you do not get the keys immediately. The timeline from when you buy a house to when you move in can range from a year to four years, and there is no way to know exactly how long the closing may be delayed. Also, there is no possibility of income from rentals.
While you can personalize the condo’s interiors, flipping will require the builder’s permission, especially if the property is being sold on assignment. Often, it is hard to predict future value, and inexperienced buyers may not be prepared for the costs of the process.
“Resale condominiums” are previously occupied units. Buying a small home for investment purposes is always a good option, and you can buy a resale condo in a suitable location. These condos offer the opportunity for buyers to quickly move into their apartment or rent it, with an immediate return on investment. Some other benefits of buying a resale condo are as follows.
- Flipping a resale property is easier, with no permissions required from the builder.
- With a resale unit, the buyer can see exactly what they are paying for, how much space they will have, what the layout is like and what the common amenities are.
- There are no lengthy waiting periods before you can move in, and you have the added advantage of checking out the condo community.
- And the biggest selling point is no “notorious, nagging landlords.”
Conversely, the buyer will start paying the condominium’s maintenance fees when the deal is closed. And sometimes, there may be unforeseen expenses due to special assessments, major repairs, and renewal projects. Also, resale units are available only in older properties, so a technical audit (a building-wide inspection) and a reserve fund study to determine the condition of the building and common property may be necessary.
We have an informative, short you-tube video listing the advantages of both pre-construction and resale condos, with our recommendations. You can watch it here and better understand the available options.
Which is a Better Bet?
The real estate market constantly changes, and each investor has unique needs. If you are considering buying a home for the first time, read our blog for First Time Home Buyers and understand the inherent pitfalls. When purchasing a property, whether it is pre-construction or resale, there are many choices you will have to make besides the budget. The easiest option is to weigh the pros and cons with your mortgage and real estate professionals. Once you are sure that condominium living fits your lifestyle and finances, contact our expert team at Our Team, and you will get the best possible advice.
There is no simple answer to which is a better bet. You can look for an appropriate resale condo if you have enough money for the entire down payment. However, if you are looking for lower costs and are willing to wait, you should choose a pre-construction property where you can pay the down payment in multiple installments over several years. Also, the latest architectural design trends in a pre-construction property have the added benefit of getting a higher market value when selling on assignment.
Whether you are a potential home buyer or an investor, the major advantage of a pre-construction condo over a resale condo is that it guarantees the investor both a personalized home and a long-term assured return on investment at a significantly lower expense.