Buyers may prefer to buy preconstruction condos for a variety of different reasons. As of late, it has become a popular vehicle used by investors to capitalize on the condo boom. In a pre-construction transaction the buyer is generally required to put down a 20% deposit of the purchase price. Historically, investors have preferred this method as it has allowed for a healthy RETURN ON INVESTMENT (ROI).
- $300,000 – Purchase Price in 2011
- $ 60,000 – Deposit (20 %)
- $ 10,000 – Closing costs
- $350,000 – Sale price of unit after closing in 2014
In the scenario above the owner bought his unit at an agreed upon purchase price of $300,000 in 2011. Upon finalizing the purchase, he gave a deposit of $60,000 spread over the span of a year. He incurred closing costs of approximately 10,000 upon receiving possession of the unit. He eventually sold the unit in 2014 for $350,000. The buyer sold the unit for an additional $50,000 over the purchase price. Since he only put down a capital deposit of $60,000 and paid an additional 10,000 in closing costs, the buyer had out of pocket expenses of $70,000. The $50,000 he made represents a 71.4% ROI (return on investment).
Please note the example above is a simplistic depiction of a transaction in order to illustrate the capital required and equity to be earned.
The process of buying a pre-construction condo with my support is fairly simple, and would be as follows:
- You and I would arrange a meeting and go to the sales centre together.
- We would review all the project information and tour the site location.
- We would choose a suitable floor plan according to your needs and requirements.
- Once the unit is chosen, I WILL NEGOTIATE WITH THE BUILDER ON YOUR BEHALF so as to ensure you get the BEST POSSIBLE DEAL for your purchase. I will also try to get you as many additional upgrades as possible.
- Once finalized, we would sign all the necessary paperwork and provide the builder with a cheque of $1,000 to hold the unit.
- Next, you will have your lawyer review the Agreement of Purchase and Sale and advise you accordingly.
- You will need to give the builder postdated cheques for the remaining deposit payments.
The buyer will have a period of 10 days to cancel the agreement and have your deposit returned. This is commonly referred to as a 10-day “cooling-off period”. After these 10 days expire, the contract is firm and the builder will contact the buyer with all the necessary follow-up information.
Currently, there are great opportunities to buy Pre-Construction Condo’s in the Mississauga Square One Area. I am a VIP Agent with many of these builders and I receive EXCLUSIVE ACCESS RIGHTS to units before they are even released to the general public. If you are interested in buying a Pre-Construction Condo in the Mississauga area, please e-mail me directy.
Remember, MY SERVICES ARE FREE OF CHARGE TO YOU.