How to get ahead of the competition when investing in pre-construction condos

Work with a platinum agent

Resale real estate is basically a free open market with few exceptions (such as private auctions at the very top end of the segment). The pre-construction condo market is not the same as the resale side in this respect. You really need an inside connection because for pre-construction units there is no realtor.ca to browse, there is no MLS system.

Sure, you can walk into a sales office and purchase a unit that way, but by the time a builder has set up shop, the units offering the best value have already been sold.

So enter a platinum agent such as myself. Platinum agents have worked directly with builders and have a proven history of selling a lot of units, which explains the relationship. A developer is willing to give these realtors exclusive access to units because they know they can move them and quickly, and this is crucial in the early stages of a project.

It’s safe to say that your cousin who just got his real estate license or your mom’s agent who specializes in rural properties in Stouffville probably won’t be able to get you the insider advantage!

And buy as early as you can

Almost all developers, no matter how big or small, need to get their projects financed to move forward and break ground. Hence, they need to demonstrate that there is strong interest in a project so that the lender can feel safe knowing they’ll be getting their own investment back. Usually, this means a developer needs to sell about 70 per cent of the units in a project beforehand.

Because time is money in development, the units that are released first–the ones platinum agents have exclusive access to–are priced the cheapest, generally offering below market pricing. They can also be some of the most desirable floor plans.

Now, if you’ve missed out on the first phase of a larger project, don’t worry. I’ve seen developers raise prices too quickly in subsequent phases, and it’s killed demand, leaving them below that 70-per-cent threshold needed to move ahead. It’s not easy to recover, particularly in Toronto where there are many projects vying for pre-construction buyers. So even a second-phase release can present a solid investment opportunity when there are incentives in place – again, only available to a select few Platinum-level agents.

By getting in as early as possible, you’re not only saving money, you’re buying time. The unit won’t be ready for several years, yet you’re already benefiting from price appreciation–and you’re doing so without having the responsibilities of a landlord.

Ready to find out how you can get the Insider Market Advantage working for you on your next condo investment? Please contact us today.

 

***If you enjoyed this blog post, check out the podcast episode that this was inspired by here.***