***Real Estate Uncovered*** Pre-Construction vs Resale “What’s the best investment“

Posted On September 3, 2020

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 very clear and defined requirement but when you are an investor than the flexibility is more as the decision is based on the return on investment not based on the personal requirements of the property.

There is a famous saying “One shoes doesn’t fit all “, the same way it works in the Real Estate. It all depends upon the individual as every person has a different situation and his way of functioning is different. Pre construction or Resale for an investor is a big debatable topic and both have its pros and cons. We really need to do a deep dive into investor’s portfolio, his appetite of risk, 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 resale housing market all across GTA has gone up by 15.4% as far as sales are concerned. At this point of time, there are limited options for the buyers or investor as the inventory levels are really low which is keeping the pace of the market in upward direction.

Now let’s take our attention to the real topic, Pre construction vs. Resale. Based on my experience of selling thousands of pre construction and resale homes and condos, I will share my advice with you. If you feel more inclined towards pre construction then buying a high rise or condos is a good idea but you have to be little thoughtful about location and market dynamics in the area in which you are buying . When it comes to resale, it’s always a good option to buy a small house for an investment purpose. Both Resale and Pre construction has its own pros and cons.

RESALE

Advantages:

1. you immediately get the possession within few weeks.

2. You can start making rental income immediately.

3. You can physically see the house.

4. You are not worried about cancellation of project as you get your ownership faster

5. It’s easy to resell as there are not many restrictions.

6. You can always get double dwelling unit in resale for extra rental income.

7. You can get the refinance after sometime and can utilize the money for further investment

Disadvantages:

1. Your mortgage payments start immediately after the closing

2. You have to take the trouble to manage tenant

3. House might need some repair and maintenance

4. All the down payment goes almost one time

5. No leverage of time and money.

PRE CONSTRUCTION

Advantages:

1. Leverage of time and money.

2. Down payment goes in parts.

3. No mortgage required immediately.

4. Opportunity to sell on assignment.

5. You get possession after few years and by the time your property is appreciating.

6. No hassles of tenants until possession of property.

7. No maintenance required until possession and least maintenance after possession as it’s new.

Disadvantages

1. You are buying the property on papers only.

2. Fear of cancellation of project as it’s a long gap between purchase and closing.

3. Mortgage rate might change by the time when you get possession.

4. No rental income until possession.

5. over competition at the time of possession as many units come together in the market.

6. Many things depend on the builder in purchase so you have less control on the situation.

7. Market conditions might change.

8. Permit and other regulatory requirements for the builder.

I can very well understand that it’s not an easy decision even for a seasoned investor to identify the right investment among so many available, that’s why I strongly recommend taking an expert advice on the matter. Either it’s pre-construction or resale, it’s a very big decision and you want to make sure to do it right.

In case you are looking for a no obligation one hour session about How to build your Real Estate portfolio, please contact Save Max and we will steer you in the right direction towards achieving your goal of Real Estate investments.

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