Buying pre-construction, how does it really work

Many investors are looking for the best return on their investments. If you are investment savvy and looking for an excellent return on your buck, you can consider buying a pre-built condo (Building that is not yet built). Just before I get into the advantages of buying pre-construction, let me explain how developers in the Greater Toronto Area work.

When a builder purchases a land and is given the zoning approval to begin selling units, the builder will contact a handful of VIP Brokers to inform them of the launch of the new project.  Keep in mind that these are usually hand selected brokers in the Greater Toronto Area, and not all agents have these kinds of direct connections with builders. 

These brokers are given a period of two weeks to inform their investors of the project and given a special Builder incentives and discounts that are not offered to anyone else.  If you are lucky enough to be connected to these VIP brokers, you will get much larger advantages than any other investor. 

The main critical advantages of having a special connection with a VIP broker, is that investors are already ahead in the game if they purchase in that two week period. When the VIP brokers bring in their investors during the two week period, most of the good units are sold, when the two weeks are done, the builder would then invite other brokers and agents around the city to bring in their investors to purchase any leftover units.  Again, the public is not invited during the second stage.  When the regular agents bring in their investors, the prices of units have gone up after the two week period sometimes by 5-10% percent.  So, first investors who bought earlier got the upper hand on cheapest prices and best selections of floors, layout and views. 

After the second tier investors purchase the units, the builder would then open their sales office to the public. The normal public would line up during the opening day, only to be disappointed to see that best units and best layouts are already sold out and have to pay a premium price that the first and second investors have already paid. Note that the demand on the project increases the prices of units, if the public is willing to pay it.

So, savvy investors want to make sure they have special connections with their First type of Brokers to have the VIP first day pricing to any new building projects.  In pre-construction investments, sometimes a minute can be the difference between $5000 to $10,000 in savings.  

ADVANTAGE OF BEING A VIP INVESTOR

  1. Most pre-build condo projects are sold by 50% before the general public launch.
  2. As a VIP broker, I have access to all Condo developments before the general public launch. In order to be invited to builders’ launch events you must accompany a VIP broker.  I work for YOU and have your best interest in mind. 
  3. I provide an honest unbiased opinion of the project and will inform you of the best possible options.
  4. While I work for you the Buyer, please note that there is NO COST to you.
  5. Having a connection with a VIP Broker, you have upper hand, VIP access to units that are not yet offered to the public.
  6. The main advantage of being a VIP investor, you can purchase a pre-construction condo at 5-10% cheaper than what the public would pay.
  7. Investors get special VIP access to meet with the builder, view floor plans and choose their units, without the waiting in line and spending endless nights waiting outside the builder door, when their office releases it the public.
  8. The investor would get a wider selection of floor plans to choose from and best pick at unit levels, best layouts, city views, floor plans and lowest price.
  9. The investor can customize the condo to his/her needs and budget.
  10. The builder pricing is based on today’s prices for future value.
  11. Investors only need 20% down payment of the actual price, paid to the builder in installment as a deposit over the life of building construction.
  12. Some builders offer additional incentives if investors buy in the VIP stage; such as, free locker or discounted price on parking, or what I have seen in some situations, free assignment (selling the unit before the building is complete) or maintenance free for one year!
  13. When the project is finished, the investor has many options; move in to a brand new home; rent it out; sell the unit at the actual market value (usually up by 5-10% from the actual price paid when buying it at the pre-construction rate).
  14. This investment strategy, gives the investors the power of leverage, of buying today with little down and the building (theoretically) appreciates on your minimal down payment. A good investor usually pockets a good $50,000 to $100,000 in each investment. Bigger ROI on any other investment strategy.  

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Agent
Audice Nasser

MBA, Broker

World Class Realty Point Brokerage

240 Duncan Mill Road, Suite 403
North York  Ontario M3B 3S6

416-890-9882 audice@mytorontohomesale.com