Toronto’s property market has yielded excellent returns on investment over the last decade-and-a half, so it is not surprising that so many people are eager to jump into this booming sector before they are completely priced out. As it is the cost of buying a home in the city is prohibitive for many young executives and families. One of the better ways to find the right property in the right location at the right price is to buy off-plan. All this means is that you will be buying the place from the developer’s blueprints and specs.
A Matter of Research
Although buying off-plan might seem like a huge risk, if you do your research properly, it is one of the best ways to guarantee an increase in your investment almost immediately. While there are risks to buying off-plan, you can mitigate them by knowing the developer, researching their other developments, finding out whether they have any outstanding complaints against them, finding out what customers who bought in their other developments have to say about them and gauging the level of interest in the project.
What to look for
Naturally the first thing to look for in an off-plan project is location – this holds true for either condos or single-family homes. You will want the development to be close to shopping and transportation and close to whatever else you might deem necessary such as:
You should also look for the amenities that the project will contain and the number of phases projected for the development. If you are buying off-plan for phase one and there are four more phases planned, then get ready to live with constant construction in your backyard for several years while the rest of the phases are completed. If there are going to be several phases all sharing the same facilities, then you might run into a question of crowding and your complex will have high traffic.
The cost of buying off-plan will be another consideration. Naturally you will want to bargain for the best price, but don’t be afraid to ask the developer to throw in upgrades such as better appliances, counters or finishes.
Price will be easier to negotiate on projects that are not selling as fast as hot-properties. Also, the number of upgrades you want will affect your bottom line. However, keep in mind that getting the upgrades you want now is far smarter than renovating later on, so spending a bit more up front is definitely worth it in the long run.
Included in the price category are the ancillary costs that you will be called upon to pay later on – maintenance fees, utility fees and infrastructure fees. Make sure that those costs won’t negate any savings you made in buying off-plan.
Buying off-plan guarantees you a minimum 10% return on your investment. As most people are skittish about investing in something that hasn’t yet been built, developments are always priced about 5% lower than when it is built. When a project is finished the price increases by about another 5%. So, if you are willing, buying from a plan is one of the best ways to ensure your real estate buying dollar goes as far as it can.