If you are just getting started in investing your hard-earned savings in lucrative areas that yield the maximum potential, we have two words for you: real estate.
One of the smartest investments is to put your money in the property market, especially the Canadian property market. This is because real estate, in general, offers low risk with high rewards, portfolio diversification, and a passive income stream. Plus, since property tends to appreciate with time, it offers substantial profit margins.
Investing in real estate in Canada, in particular, has many advantages as it provides considerable tax flexibility, making it a highly attractive investment opportunity for first-time and seasoned investors alike. Furthermore, Canada is an economically stable country with tremendous growth potential, which makes the property market a relatively safe bet. Currently, the real estate market in Canada is booming, so you can expect a handsome return in the near future.
Within the Canadian real estate market, pre construction homes are all the rage. As the name suggests, these are bought prior to the construction of the home. Usually, people opt for condos in new buildings that are under construction.
In this article, we have highlighted the major benefits of purchasing pre construction homes to help you understand if it is the right investment option for you.
One of the top reasons to invest in real estate is appreciating property values. In this regard, pre construction homes are great since they behave very similar to the futures market.
Basically, you buy at today’s price with the hope that it will appreciate in value in the future, giving you a return on your investment. With pre construction homes, a sharp increase in property values is very likely since building and construction end up gentrifying neighborhoods and attract other development projects in the area, developing the area in the process as well.
Pre construction home buyers purchase property at a time when the locality isn’t as developed, gaining an advantage by buying at a relatively lower price and witnessing a dramatic increase in the value of the property over time. Later on, they can either sell it off or rent it out depending on what is the best course of action. In this regard, selling the house can yield a major profit on the investment while renting it out can fetch a good monthly income stream.
It is important, therefore, to do your due diligence before purchasing any property, especially a pre construction home. Ideally, you should consult a realtor so that you have insider knowledge regarding up-and-coming neighborhoods to help you make smart investment decisions.
Pre construction homes allow buyers to steer clear of heated bidding wars. This is because builders may try to artificially inflate the prices of resale homes to gain a larger profit margin, which pits buyers against each other and further drives up the price.
With pre construction homes, however, this can be avoided as they usually have a fixed price since they are in the development phase. This makes them relatively cheaper to buy when compared to resale or post construction homes, offering a first-mover advantage to the buyer.
Owning a pre construction home is pretty great from a financial perspective as it offers a spread-out deposit structure which means that as a buyer, you won’t have to give the usual fixed percentage deposit upon purchase.
This is because the deposits tend to be extended over a certain period of time which allows buyers enough time to save up and secure the needed funds as they pay in installments. What's more, you own the pre construction home but will not be obligated to pay the mortgage until the property is registered or complete. Essentially, you will be required to only pay the deposit until the home is completely built.
This is great as it saves you money during the purchase process and doesn’t affect your debt ratio, ensuring that you can take out loans for other purposes should you require to do so.
Pre construction homes allow you the freedom to choose finishings in the house and at times, even the layout and architecture of the property. This is pretty great since you can tailor the house to your needs and preferences, and include whatever suits you.
Essentially, you can get involved in choosing the kind of flooring, cabinets, and fixtures along with any other interior or exterior finishings you want. This is cost-effective as custom fittings tend to be cheaper prior to construction as opposed to retrofitting features after the place is built. You can even install energy-efficient features that will help you save money on utility bills in the future and also help make a positive contribution to the environment.
An associated advantage of custom building in pre construction homes is that you can incorporate designs that compliment your existing furniture and upholstery in terms of accessibility and aesthetic. This can help you save tons of money since you won’t have to buy new furniture, appliances, or other paraphernalia as your custom-designed house will easily accommodate everything you presently own.
Buying a pre construction home means that you won’t be dealing with the added burden of renovating the house or spending on repairs and maintenance.
There is also the benefit of getting the latest architectural design trends in a pre-construction home as opposed to a resale home, which translates into a higher market value for when the home is constructed. This means that you could probably get a higher market rate when selling or renting it out once your property is completed.
Added to that, there is the wonderful new home smell that you are likely to fall in love with!
Buying real estate, particularly pre construction homes in a multicultural city such as Toronto is a great way to invest your savings. Just be sure to always ask for any hidden costs such as occupancy fees and the projected timeline for construction to accurately plan out your future finances and investments.
If you are ever confused about buying a pre construction home, just refer back to this article to help you make the right decision. We wish you all the best!