4 Common Mistakes New Condo Investors Make

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4 Common Mistakes New Condo Investors Make

According to a 2014 survey by the Canada Mortgage and Housing Corporation (CMHC), one in five condos sold in Toronto and Vancouver is purchased as an investment unit. Although new condos often make for promising investment opportunities, be sure to avoid these 4 beginner mistakes:

  • Not checking insurance documents. Flood and windstorm coverage, for example, are important. So is whether or not premiums are financed. Insufficient insurance can be expensive, and not having enough to pay the premiums can be too. In other words, make sure your new house is in order–before you buy.

 

  • Misunderstanding “total square footage.” Your condo-to-be may not be quite as spacious as advertised. Condo sale ads usually include the measurements of balconies or terraces in their calculations of total square footage, and may even list room measurements based on the distance between external walls. Don’t base your take-away on floor plans, brochures, or sales pitches. Resale condos are not permitted to include hallways, bathrooms, basements or outside spaces as part of their advertised square footage, but no such limitations apply to new build or pre-sale condos.

 

  • Buying at the wrong time. If you’re buying a new condo as an investment, the key is to get in as early as you can. As a way of acquiring the funds to fuel a new project, builders often raise initial funding through pre-sales, which can start out with some invitation-only VIP-type events. Only after that will sales be made available to other interested realtors, until finally it also becomes open to the public, but by this time, about 50% of the units have already been sold and the price has gone up three or fourfold. By working with a realtor who specializes in new developments, you can get in earlier on these deals. Buying at the right time of year can also save you. Summer is hailed as the best time to buy in the GTA, and December and January are also a good time, before activity increases again.

 

  • Choosing the wrong developer. Always find out who built the condo you’re thinking about snatching up, because it can have a significant impact on the quality of your investment experience. Make sure your developer has quality and design standards—like Louie Santaguida’s Stanton Renaissance—by doing a builder background check. If you’re going to invest, it’s in your interest to do it right.

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