Top Factors Every Pre-Construction Buyer Should Consider when Choosing a Project
- Peter Gregorian
- Oct 11, 2024
- 4 min read
Everything you need to know about choosing a winning pre-construction project in Ontario
There's no denying that pre-construction projects and new housing starts have faced their fair share of challenges within Toronto and the Greater Toronto Area (GTA) as of recent. While the pre-construction climate might still be shaky and developer interest has waned, this shouldn't stop you from considering new pre-construction for your first-home - especially if your time horizon is a couple years out - or first real estate investment.
This guide will cover the key factors to consider when deciding on which project to purchase and invest in.
Location, Location, Location!
If you've read our last article about Why Location is the Foundation of Every Profitable Real Estate Deal, then you know that the age-old adage still holds true - especially when considering pre-construction.
When the market is hot, there tends to be a flux of choice centralized around certain hubs in the city. The first and foremost factor to consider is where you want to buy. Whether you're eyeing the vibrant heart of Toronto, the bustling streets of North York, or the charming communities of Markham, your chosen location will significantly impact your lifestyle and investment potential.
You will want to assess the planned development area for existing developments and their success, accessibility to the site by car and/or transit, and community services available. Especially in Toronto where overcrowding is a valid concern, understanding where the development is situated and the current or future development plans for the area will provide hints of whether the project is a good investment for you or your family.
On that note, determining where to buy will require some introspection and long-term planning if you intend on living in the home once its complete, for reasons we'll cover later.
Developer Credibility and Track Record
It's always important to ask "Who?". Who is behind the project and what is their track record like? Work with a REALTOR® to get the scoop on the reputation of the developers behind the projects you're interested in and also receive access to special incentives.
Established developers with a solid track record are more likely to deliver on time and maintain superior quality. Look into their past projects, reviews, and reputation within the industry to gauge their credibility. Consider their time in the market, number of projects completed and the quality of those projects. Lastly, understand their reputation for developing investor-targeted units or owner-occupied units.
Amenities and Features
With the location narrowed down and an understanding of the who's who of developers, it's time to get project focused. In thinking about what you want and need from your future community - whether that's a condo or freehold community - you'll want to consider the amenities and features being offered.
From luxurious swimming pools and fitness centers to eco-friendly designs, high-end finishes and smart home technology built-in, the right amenities can enhance your living experience and increase the property's appeal over time.
Putting aside the initial allure of features that many projects tout, remember that if the property is part of a condominium, more amenities mean that there is a higher likelihood for condo maintenance fees to increase in the future!
Floorplans and Layouts
Now the fun part! Respecting your budget and size needs, its time to sift through available floorplans. Understanding floor plans and their layouts is crucial when selecting a pre-construction project for several reasons:
Floor plans often feature callouts of the size and dimensions of the space which will help visualize the layout and flow of the space. This helps determine if the design meets needs and preferences.
Examining a floor plan can also reveal how functional the space will be for daily living. You can assess if the rooms are appropriately sized and if the layout fits your lifestyle.
Tip: Look for floorplans that maximize usable space! Oftentimes, more architecturally beautiful homes or buildings may sacrifice usable space for building design or structural elements like pillars.
Understanding the floor plan enables buyers to envision any customization or modifications they may want to make before the construction is complete. In some cases, builders may offer the chance to add extra walls or sliding doors to certain spaces to create additional, enclosed spaces.
A well-thought-out floor plan can enhance the resale value of the property. A layout that is practical and appealing to a wide range of buyers can be a significant selling point in the future.
For example, if a pre-construction condo has a functional 1 plus den layout, the ability to use the den as a second bedroom will enhance perceived value in the eyes of a future buyer or renter.
Deposit Structure and Payment Plans
When budgeting for a pre-construction purchase, factor in not only the initial purchase price but also any additional costs, such as closing fees, development charges and property taxes.
Most importantly, understand the deposit structure being offered by the developers. Deposit structure is crucial for understanding when payments need to be made and the time horizon over which to have the entirety of the funds available. Some developers even offer extended deposit structures meaning you don't have to pay into the project for up to 730 days which means more liquidity in your own account.
Timeline and Completion Date
Most importantly, inquire about the project timeline and estimated completion date. Delays can happen in new construction, so having a realistic expectation of when you can move into your new home is crucial for planning and financial purposes. If you can afford to wait, longer time horizon projects can mean that your money appreciates as the project nears construction milestones and the market improves! This is one of the benefits of investing in pre-construction.
Navigating the pre-construction market can be a rewarding experience with the right information at your fingertips. By considering factors such as location, developer credibility, amenities, pricing, future market value, and completion timeline, you can make a well-informed decision that suits your lifestyle and investment objectives.
Need help finding a pre-construction project that meets your wants and needs? Get in touch with us today to explore your options!
Disclaimer: This blog post offers general guidance and should not be considered as professional financial or investment advice. Always consult with a qualified financial advisor before making significant investment decisions.
