Buying a Pre-Construction Condo?
We’ve all heard the stories. Someone, whether they’re simply a buyer or an investor, buys a unit in a condo development before construction has even began. By the time the building is fully built and ready to move in, that buyer either moves in with little inconvenience, or they sell it and make a great profit. Often they even sell it a year or two before the building’s been built and get a tidy return on their money. But what’s so little talked about are the downsides to buying pre-construction condos. And if you don’t know what they are, you might jump into something long before you’re actually ready to.
Sometimes what happens is that you no longer had the money you thought you would when it comes time to pay for the rest of the unit. Maybe you’ve lost your job within that time, maybe you’re a new immigrant that is now having problems accessing the money in your home country (it happens more often than you think,) or maybe you didn’t get that promotion that you’d been promised before it fell through. Let’s be honest. While we may look realistically down the road today and think that we’re well equipped to make a big purchase several years down the road, no one can actually predict the future. And by the time that future becomes your present, your personal financial picture could be much different than you thought.
And this situation leads to more consequences than simply having to give up a condo unit you’ve already fallen in love with. Typically when it happens, the buyer has to forfeit any down payment they’ve already put up for that unit, and often that equals out to being tens of thousands of dollars.
According to The Star the best thing any buyer can do is speak to the developer or builder before they hand over that chunk of change, and make sure that they’ll be able to get it back should their situation change before the time comes to move into the unit and hand over the rest of the purchase amount. Here, we simply don’t think you’ll find a builder that’s willing to work with you to that extent. After all, they have a budget they need to keep as well, and they also need to know what their current projects are expected to bring in before they can move onto another (again, probably years before the building is even constructed.)
The only way to really get around this is to have the money – at least the majority of the purchase price – before you start looking at pre-construction condos. And yes, that’s a large sum of money to come up with in the first place, and maybe even harder to hold onto for the years in which you’re neither living in the condo or actually paying for it. And when that’s the case, we just have one more piece of advice for you. Start looking at condos and units that are already built, and that you can pay for today, sell today, and do whatever you please with, without having to wait to see where you are a few years down the road.