My Problem With Pre-Construction Condos

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The opinions expressed herein are solely that of Tom Storey, not Royal LePage or the TRREB and should not be misconstrued as advice or the basis of an agency relationship whatsoever. Please consult your professional advisor prior to taking action on any decisions relating to the matters discussed in these videos. This communication is not intended to cause or induce breach of an existing agency agreement. This is not financial advice.

[Precondo]

I came in here ready to be mad and then you softened me up with that shoutout

[Kadmos]

I think most people don't understand that there are additional closing costs.
So even if you think you got a "deal" with an assignment sale, you need to factor in closing costs where the builder will charge you like 5-10% of price and then there's the phantom rent / occupancy fees.

[vert]

Precon has only ever seemed viable as an investment property. If you need a home to live in, buy resale.

[johnderperez]

Great points Tom. One thing everyone should consider is that, at one point, every resale condo trading hands in the current market was a pre-con. So it’s just a matter of why buy pre-con vs resale, and doing what’s right for you - your budget, your lifestyle, your comfort level.

[armandbejar]

Thanks for your insight about realtor incentives regarding pre-construction

[bigbolt]

Thanks for the info on agents making more on preconstruction as opposed to resale homes.

[nickyfurlano]

I watched the ones being built at Markham Road and Major Mackenzie in Markham and they used about half the amount of lumber so save on costs. Then priced them around 2 million apiece with no backyard and no basement.

[das_it_mane]

What you said about realtors making more on preconstruction might be a local thing for Toronto. In Ottawa, the builders pay much much less than resale. Sometimes they don't even pay anything at all.

[joojemca]

I am prohibited to purchase a property as a foreigner. Though I have a study permit, still there are so many restrictions and conditions apply. I hope I can buy one soon in Canada.

[jcsdesign]

My biggest issue I have with pre construction condos is how owners are forced to pay for occupancy fees. What year did this start and how every single developer knows this clause adds to the closing cost is beyond me. I bought a pre condo in Markham on a high floor of a 2 tower project to live in. Little did I know that I had to wait for the 2nd tower (I bought in the 1st tower on a high floor) to be completely occupy before we could go to final closing. I may end up paying "phantom" rent for up to 20 months as required by post dated cheques on my interim closing. Renting out my unit is not an option as I chose to buy pre con simply because I wanted brand new and the desired location. Why my occupancy duration is so extended is beyond anything I could have imagined. Now, I live in a building with mostly tenants because apparently an estimated 70%+ of those living in my building are all paying this occupancy fees because the monthly rent is lower than the market value because no amenities are available and the building is probably only about 80% complete. It makes me wonder how many owners were truly in this to invest or be an end user? Why can't pre construction projects just deliver a 100% completed project and move straight to final closing like major cities in Asia i.e Hong Kong. Another issue I have with the pre construction condos is how parking is "randomly" assigned. Parking spaces as we know has become a high valued property yet developers give you what they want (usually the least desirable spot). When developers submit proposals are to the city, it outlines all the underground construction down to the parking space numbers. Why can't buyers pick and choose their desired spot just like the way we pick condo units? I'm glad you touched on the higher commissions that realtors make on pre condo. They push for sales like they represent the developer which is completely unnecessary. Why do buyers even need to be "represented" in a pre con sale? I could easily represent myself by walking into a presentation centre and buy whatever I please.

[howy]

Ive been around for a while. They werent actually cheaper than resale 10 yrs ago. They were 20 yrs ago. But new has always sold for more than old and the value was higher...

[Tedtopdawg]

People brought a few years back for 1500-1700 sqf for something is only1000 sqf now …..

[pamelaminhou]

Bought a couple precons (not in Toronto) because I saw ppl make loads of money buying precon in Toronto early 2010s. (At the time resale was more expensive than precon, if you can imagine) Lots of ppl bought one bedroom precon-condos in Toronto for 250k which were valued at 500k at closing. Obviously, this is not possible now. The staggered deposit and extended timeline also make them an enticing investment product.

[HungPham-hope]

Tom I bought in Vancouver 500 sf under 500 k until 2026 is it ok ?thx

[andrewmccoll]

Wait, they used to be CHEAPER than resale??

[scottypiffan]

Hey Tom great show, i watch and learn from you regularly. I'm not clear why developers wont lower their prices but like you said will give out tons of incentives?

[jaspreetpannu]

Thoughts on United Building? 481 University Ave.

[p.rrohith]

People made money in condo assignment sale in end of 2021 when condo prices went up.

[jessicawinslet]

omg it's steve from blues clues. Take advice from him. LOL

[vert]

Your super slow zoom in might just be your channels trademark.