BENEFITS OF

Owning a Pre-Construction Property

1. Extended Deposit Structure

When purchasing a pre-constructed property, the initial deposits (between 15%-20%) are typically spread out. This can extend over an 18-24 month period. This basically allows you to have more time to save money. And not worry about putting a 20% deposit upfront. Now during the 3-5 year time, it takes for the property to be built, other than paying the deposit structure, there is no mortgage payments until closing. The mortgage only starts on closing, this means you own the pre-constructed property, but it will not show up on your credit bureau. Many first-time home buyers and investors see it as a forced saving/investment strategy.

2. Gentrifying

Historically, long-term prices of residential homes have always gone up. For this reason, you can improve your odds of appreciation by acquiring properties in highly gentrifying neighborhoods. This is where major infrastructure or transit is scheduled to be built. Given that the property you are purchasing will not be available for 3-5 years, it makes sense to acquire a new home in an area that’s on the rise. These neighborhoods will have a lower purchase entry point and a higher potential to outperform the overall market.

3. Newer is better

The typical life span of a condo can slowly start going down because of the overall age of the building. If you purchase a condo that is a couple of years old, then sell it 3-5 years later. The condo might have a harder time competing in the market because the building became dated and the maintenance fees start to rise. Whereas if you purchase a pre-constructed condo, in four years, you’ll have a brand new property. And, it’ll be in demand while hopefully having appreciated with or above the market during the construction period.

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