There are several pros and cons to buying a condo before its foundation is poured or during construction. Here is a list to help you decide the best way for you to go:
- You can customize your unit and make it your own.
- Buying early in the development is generally the time when prices are the lowest. Typically they appreciate over time.
- You only have to put down a 15-20 per cent deposit on the market value and when you sell, you reap 100 per cent of the value.
- More time to save or downsize while the project is under construction.
- A longer closing period means more time to save for the downpayment.
- Lower maintenance fees. Buying new means the monthly maintenance fee will likely stay the same as the day construction was completed and remain so for about 10 years.
- On the investment front, your money is tied up for a few years until it’s built – with no return on that until you sell and hopefully the value has appreciated by then.
- You’ve paid out cash for an intangible, something that’s a floor plan layout and artist renderings.
- Potential delays in completion. Time delays can occur due to weather, labour shortages, supplier problems, inspection problems, etc.
- Layout plans may alter without you having any say in it, as the developer has the right to do so. The hefty sales contract is riddled with phrases like “more or less” and “subject to change without notice,” giving the developer free reign to change the plans on which you initially signed.
- The market may change by the completion date bringing a drop in market value and interest rates may rise or your personal situation may change that would make condo life less appealing.
- There may be additional costs on closing.
- When you finally get the keys to your condo you don’t own it, yet, until the building is registered, and that could take up to a year. Meantime, you have to pay an occupancy fee to the developer. It’s much like paying rent on a condo you own.
Before you buy, make sure you’ve weighed all of the pros and cons of buying a condo on spec so that when you’re ready to move in years later, you love the place and have made a wise investment.