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The Pre-Construction Buying Process

18 March, 2018

For the past decade or so, growth has been difficult to miss in many of Toronto’s neighbourhoods. While some may think Toronto may be in a condo bubble, the fundamentals supporting such growth have been present for decades. They generally consist of employment, neighbourhood demographic, immigration, interest rates and government planning and subsidies.

It’s not quite like New York (yet) or London and Hong Kong, but it’s definitely on the path to becoming one of the most mature and world-class cities in all of North America and, certainly, in line with the aforementioned and cities.

Looking for a guide to buying a pre-construction condominium?

If you are reading this, you are in the right place. Let me enlighten you with something many will not tell you…
Here are some approximate stats:

  • There are over 50,000 agents in the GTA
  • 80% of agents do 1 or fewer deals per year
  • Over 99% of agents have NO ACCESS to newly launched projects at the lowest prices with the most incentives

After reading the above stats, would you rather get on a plane and travel across the globe with a pilot who flies once a year or 5 times a week? If you would rather have the experienced pilot fly the plane, please continue reading.

There are typically multiple phases to every pre-construction project.

  1. Platinum agent launch (lowest price, most incentives)
  2. VIP agent launch (higher price, less incentives)
  3. General agent launch (higher price, less incentives)
  4. Public launch (higher price, less incentives, small selection of units to choose from)

Example below:
Builder XYZ 1 bedroom unit 550 Sq ft with parking and locker.

Platinum Level 

Price: $550,000.00
Parking: $50,000.00
Locker: $5,000.00
Average rent/month: 2200
Average occupancy period: 6 months

Incentives:

  1. Extended deposit structure
  2. Right to rent during occupancy (to be explained later)
  3. Wider selection of units to choose from

VIP Level 

Price: $565,000.00
Parking: $55,000.00
Locker: $7,500.00
Average rent/month: $2,200.00
Average occupancy period: 6 months

Incentives:

  1. Standard deposit structure
  2. CANNOT rent during occupancy
  3. Less than 50% of units to choose from

Cost difference compared to non-platinum
$2,200.00 x 6 = $13,200.00 (lost rental income)
Price difference = $15,000.00
Parking price difference= $5,000.00
Locker price difference= $2,500.00

$2,500.00
$5,000.00
$13,200.00
$15,000.00
——————
$35,700.00/$550,000.00 = 6.5% (platinum savings)

General Agent

Price: $575,000
Parking: $55,000.00
Locker: $7,500.00
Average rent/month: $2,200.00
Average occupancy period: 6 months

Incentives:

  1. Standard deposit structure
  2. CANNOT rent during occupancy
  3. Less than 30% of units to choose from

Cost difference compared to non-platinum
$2,200.00 x 6 = $13,200.00 (lost rental income)
Price difference = $25,000.00
Parking price difference= $5,000.00
Locker price difference= $2,500.00

$2,500.00
$5,000.00
$13,200.00
$25,000.00
——————
$45,700.00/$550,000.00 = 8.30% (platinum savings)

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