Over the past several years alone, tens of thousands of preconstruction condominium properties have been sold in Toronto by Developers to the public (over 65,000 since 2017). The large majority of these sales are through VIP Brokerages like Big City Realty. I am pleased to say that I have personally sold hundreds of these properties, seen thousands of individual deals, and have helped hundreds of people make important investment decisions. This Blog Article is intended as a summary reference to this process – it highlights the Four Main Factors that we consider here at BCR when advising and assisting Clients.
Does the Developer have a track record of bringing high-quality buildings to market? Do their buildings maintain value over time? What is the overall look and feel of the Developer’s existing buildings? These are critically important questions, as purchasers are making buying-decisions based principally on floor plans and other marketing materials. While the floor plans and renderings provided by the Builders are one thing, the final product 4-years down the road is sometimes quite different. This is why it’s important to work with a REALTOR® who is experienced in the condominium space – to ensure that you are being advised by someone with actual knowledge of the Builder’s existing properties.
What is the nature of this location presently and what prospects does it have for future growth? Everyone has heard the real estate adage Location, Location, Location … which is true. When I think about location, I am asking myself (first and foremost) what is the nature of the market for resale and rental properties there? One way to evaluate the strength of a particular location is to look at the MONTHS OF INVENTORY of resale and/or rental properties. Basically, the less inventory available, the stronger the market. Your REALTOR® should be able to break-down and analyze the market for you in a number of different ways like this.
Am I making a good investment? Is the Builder leaving money on the table for me as a buyer? Surprisingly, many Agents working in the preconstruction space do not have a full and complete grasp of this concept. The main way that I personally evaluate a preconstruction property is by comparing the Builder’s price to the average price for comparable resale properties in the area. It is normal and acceptable that Builder’s prices are higher than resale (there is built-in appreciation, you’re getting a brand-new product etc.), but it’s a matter of HOW MUCH. This is where your experienced REALTOR® can add value to the decision-making process (I personally have a specific formula that I apply here).
It might be counter-intuitive that this is point #4, since the floor plan is the actual product that you are buying! I have personally seen thousands of floor plans as well as physical units in the resale market. It is very important that your REALTOR® can explain how what is on paper translates into real life; i.e. is the unit actually a liveable space?; what are the proper dimensions for the various rooms in the apartment?; what is the exposure of the unit?; what is the specific location of this unit within the building? You always want to purchase a unit that has a desirable floor plan and that will stand the test of time in terms of livability.
When evaluating a preconstruction property for purchase, the Four Main Factors above are what we consider here at BCR when advising Clients. Understand, with these properties the details are EVERYTHING, so it’s critically important to work with a REALTOR® who knows all of the ups and downs, risks, and rewards involved. We look forward to hearing from you and assisting in your future investment.
ELLIOTT MACGREGOR, SALES REPRESENTATIVE / REALTOR®
BIG CITY REALTY INC., BROKERAG