A Guide To Flipping Pre-Construction Condos In Toronto

• Understanding Pre-Construction Condo Flipping Before you start looking into the prospect of flipping pre-construction condos, you must first understand what it means.
• Look for a Reputable Builder Image source: Mark Potterton from Unsplash

• Think About Location and Your Business Model
• Be Wary of the Perils of Flipping

• Exceptions Do Apply
• Be On the Safe Side and Invest Long Term

• Final Thoughts

Can you sell a pre-construction condo Ontario?

An Assignment Sale in the Pre-Construction Market Only the contract can be sold. When you purchase a pre-construction condominium unit, you will be given an assignment clause/right in the form of a contract. You can choose to sell your assignment before the condominium is even built.

Are pre-construction condos in Toronto a good investment?

Why do people prefer to invest in Toronto pre-construction condos? – To find out if pre-construction condos are a good investment, it’s important to understand why many investors prefer pre-construction condos vs re-sale condos. To start, investors are becoming increasingly interested in Canadian – and more specifically – Toronto pre-construction real estate as historically, the Toronto real estate market has performed quite well.

Are condos a good investment Canada?

Buying A Condo Vs. Renting – Buying a condo is one of the best investments you can make. Condos are often more affordable than single-family homes; they’re also easier to maintain and manage, as they come with shared amenities like pools, gyms, and parking structures.

While buying a condo has many benefits, it’s not suitable for everyone. Some people go to rent a condo. Renting is often cheaper than buying a home in the long run because mortgage payments include principal and mortgage interest, property taxes, and insurance premiums (which are included in rent payments).

However, most people prefer owning to renting because it allows them to customize their living space however they want without having someone else tell them what’s allowed or not allowed in their home.

Can you sell preconstruction condo?

Can I sell my pre-construction condo? – RECO Website / / / The short answer is: Maybe. You can sell your agreement through an assignment sale, provided you are permitted to do so by the developer. But this is a complex question, so let me explain a bit more. For starters, when you bought your pre-construction condo, you entered an agreement to purchase the condo before or during its construction.

• If you are considering selling it, I would highly encourage you to seek the counsel of a lawyer who is insured to practise real estate law.
• As many pre-construction condo buyers may be able to attest, a lot can happen between the time you sign an agreement and the moment you take possession and officially own the new unit.

For instance, there could be construction delays. Or the developer could cancel the project altogether. Whatever the reason might be, if you have had a change of heart and would like to sell the condo before taking possession, you can do that through an assignment sale — which is essentially when you sell your agreement.

There must be a provision in your agreement that allows you to do this, and sometimes it comes with a fee or the stipulation that the developer has the first right to buy it back. Check with your lawyer to examine the wording in the agreement. As the original buyer, during an assignment you are transferring your rights and obligations under the agreement to purchase a pre-construction condominium to another buyer.

The new buyer will take your place under the terms of agreement, including all the rights and obligations as they are detailed in the original agreement with the developer. By agreeing to the assignment, a new buyer will be purchasing your agreement to complete the final sale with the developer.

1. It becomes an agreement between you and the new buyer, which also has terms.
2. If you are wondering, why not just sell your unit to a new buyer directly, it is because you not permitted to do that, and here’s why.
3. You do not own the condo unit until it is built, you have closed on the purchase, and ownership has officially been transferred to your name.

Something else to bear in mind is that even if the transaction is permitted by the developer, it can be challenging to find another buyer because of potential restrictions on how the unit can be marketed, prohibitions on listing the property publicly on the multiple listing service (MLS) or other platform, or associated fees required to get permission.

1. There is also the issue of the developer trying to sell other similar units.
2. That is why I suggest that you consider working with a real estate agent who is knowledgeable and experienced with assignment sale transactions.
3. You can ask them questions to help you better understand your options, weigh out the pros and cons, and make an informed decision about whether a pre-construction sale is something you would truly like to pursue.

Your agent can also review your existing agreement and confirm whether it includes the relevant terms to allow the sale by assignment. All the best. If you have a question for Joe about the home buying or selling process, please email, This column is for general information purposes only and is not meant as legal or professional advice on real estate transactions. : Can I sell my pre-construction condo? – RECO Website

Are preconstruction condos a good investment?

Investing in a Pre-Construction Condominium Unit – Investing in pre-construction condominiums is one of the surest ways to grow your money. When you invest in a pre-construction condominium unit, your investment increases in value from the first day you purchase the condo unit and will continue to appreciate until you decide to sell your unit.

1. This long-term investment strategy is a great way to generate a passive income.
2. What makes investing in real estate one of the best investments you can make for yourself and your future is that you are in complete control of this investment.
3. Real estate is cyclical like any other investments, it’s suppose to go up and down – it will go up and down and this is where you’re in complete control.

If the market is down, you can choose to hold onto your property and when the market is at its peak and you’re ready to sell, you can make a high return on your investment (ROI).

Will condo prices go down in 2022 Toronto?

Thanks for signing up! – A welcome email is on its way. If you don’t see it, please check your junk folder. The next issue of Financial Post Top Stories will soon be in your inbox. We encountered an issue signing you up. Please try again Because pre-construction units have not been registered, such sales are not advertised on the MLS system, and comprehensive data on the market is limited.

But those in the industry say stagnating condo prices are making it more difficult for owners to exit their investments. At Precondo.ca, an online catalogue of pre-construction units across the GTA, investor concern is evident in an increase in chatter about such sales. This advertisement has not loaded yet, but your article continues below.

The overall share of conversations with the intent to trigger an assignment sale jumped from four per cent in 2017 to 14 per cent this year, based on a sample of 78,000 calls that were screened for the use of the words “assignment,” “assign” or “flip.” Toronto condo prices have been volatile over the past two years, moving from $630,047 in January 2020, peaking at an exuberant $808,566 in March 2022 before calming to $730,818 in the latest September data, according to the Toronto Regional Real Estate Board.

Photo by James MacDonald/Bloomberg Precondo.ca chief executive and co-founder Jordon Scrinko said he has never seen the assignment market this soft before. “Within the past three to five years, there is a sizeable chunk of the market of the pre-construction buying pool, who bought units that may never actually intended to close on, and some of them — even more worrying — actually factually cannot afford to close on,” Scrinko said.

Scrinko added that if push came to shove, most of these buyers could afford to close, though they never intended to complete the sale and were hoping to flip the contracts for a profit. A more typical client, by contrast, might be forced to pursue the option because of a life event, such as job loss or divorce, or an inability to get financing as interest rates rise.

1. This advertisement has not loaded yet, but your article continues below.
2. Timing will be a big factor in determining which of these investors will see a profit on their pre-construction purchases, Scrinko said.
3. If they bought five years ago, they’re still in profit in nine out of 10 cases,” he said.
4. But if they bought, say 2020 or end of 2019 and the building’s coming up on occupancy today and they’re trying to flip that contract today — in most cases, those people are not equity-positive.” Those units are underwater because the prices for pre-construction condos, which used to sell below market rates, have in recent years soared due to rising construction costs, with units now commanding 10 to 20 per cent more per square foot than similar resale condos.

With condo prices trading sideways over the past two years, the valuation gap has not closed. This advertisement has not loaded yet, but your article continues below. Scrinko also noted interest in new pre-construction condos has been slowing down. “Early this year, (around) January, February, March, if you launched a condo building, pretty much no matter where it was and no matter what the price was, the market would absorb it pretty quickly,” Scrinko said.

1. Nowadays, it’s the complete opposite.
2. It’s more of a balanced market where developers can’t expect, in most cases, to sell.” Real estate organizations have also raised red flags about the pre-construction space recently.
3. Re/Max’s Oct.12 condominium report noted that pre-sale condo construction has been particularly challenged by the current environment.

“Builders who are too far invested are moving forward, but many of these buildings are now selling at $1,400 to $1,500 per square foot,” the report said. “This, at a time when the resale market rate is $1,100 per square foot. Development costs alone have risen an estimated 18 to 22 per cent in the past year.” This advertisement has not loaded yet, but your article continues below.

1. GTA condo prices have been volatile over the past two years, moving from $630,047 in January 2020, peaking at an exuberant $808,566 in March 2022 before calming to $730,818 in the latest September data, according to the Toronto Regional Real Estate Board.
2. John Pasalis, president at Toronto-based Realosophy Realty, said trouble in the pre-construction condo market could have wider consequences.

“The idea, of course, is the second new housing sales and starts slow down, that ends up having a broader domino effect economically,” he said. “We lose jobs in the construction industry and housing fuels a significant section of our economy. So, there’s massive economic risks.” “I think the bigger effect would just be a turn to pessimism, and when people become pessimistic, you end up potentially with some more distress, some panic selling, and potentially more downward pressure on prices as well,” he added.

This advertisement has not loaded yet, but your article continues below. Pasalis wasn’t surprised by the number of investors looking to back out of deals since many of them are having a tough time getting financing given the impact of the stress test as interest rates rise. The flight of investor capital from the condo segment could also weigh on new supply coming to market since fewer buyers would translate to fewer condo starts, he said.

A recent report from real estate research firm Urbanation Inc. found the Greater Toronto Area’s housing inventory reached crisis levels in the second quarter and that the pipeline of new supply was being disrupted. About 35,000 new condo units had been slated for launch this year but only 16,000 have made it to the finish line and fewer than 10,000 are expected throughout the rest of the year, suggesting 10,000 units will not be completed as planned.

This advertisement has not loaded yet, but your article continues below. Construction could be further disrupted, Pasalis said, if the dynamic that played out during the global financial crisis — when some investors stopped making their deposits on condos that had become worth less than what they had originally paid — reemerges.

“(This dynamic) could also impact construction buildings that are already in the pipeline,” Pasalis said. “Not to say that that’s going to happen, but it has bigger potential impacts beyond just seeing a lower number of housing starts.”

Is a condo a good investment in 2022?

The Condo is considered the best investment when it comes to real estate, They are the best option for rentals and very easy to manage too. However, if you are a new investor, you should be careful. If you plan to invest in Condos, you have to keep a few things in mind. Here we are discussing some basic things about condos, which will help you make a wise decision.

Is preconstruction cheaper than resale?

The benefits of pre-construction – One of the main benefits of buying a condo during its construction phase is that it’s cheaper than a resale model. When you buy pre-construction, you’re taking the risk of your new condo not being built on time due to delays.

1. Another benefit to this is that you’re getting on the on-sale price before the condo is built, so you’re the price you’re paying will be less than that of people who are buying a new condo after the construction phase.
2. So the market value of your condo is already increasing and working for you! “You know if you’re buying today you’re buying an asset.

You’re buying something in 2025 2021 price,” Elkind said. Another huge benefit to buying a pre-construction condo is that you get to choose a floor plan and your own specific finishings since your condo hasn’t been built yet. Typically, developers let buyers choose their own flooring and fixtures to give their new condo a personalized touch.

Do condos lose value over time?

Do Condos Appreciate In Value? Although properties can appreciate in value faster if they’re in a desirable location, the fact remains that most condos appreciate in value at a slower rate than single-family homes.

Is it financially smart to buy a condo?

Key Takeaways –

Before buying a condo, it’s important to understand the differences between living in a condo versus a single-family home and to determine if the condo lifestyle is right for you.Condos are usually less expensive than single-family homes and have lower maintenance requirements, making them good options for homebuyers on a budget or people looking to downsize.Loans can be harder to get for a condo because some lenders have strict requirements regarding owner occupancy and loan-to-value ratios.Condo owners will have to abide by the covenants, conditions, and restrictions (CC&Rs) of the complex or risk being fined, forced to comply, or sued.Condo owners pay monthly fees that cover the cost for ongoing maintenance and repairs of common areas within the complex, such as the grounds, pools, lobbies, elevators, and recreation rooms.

Do condos hold their resale value?

Resale Value Condominium resale values have been increasing since the end of the housing market crisis in 2007. Incredibly, resale values have seen five consecutive years of positive growth, paving the way for buyers and sellers to increase their ROI over a short period of time.

Can you negotiate pre-construction condo prices?

Can you negotiate new condo prices? — Condo.Capital When you buy a new or pre-construction condo, there are lots of things to think about and lots of issues to consider. From the building location and type of unit through to the amenities and utilities, it’s important to to find the perfect option for your needs.

• As always, price will be the most crucial factor in your decision, so you’re probably wondering if negotiation is an option.
• The short answer, unfortunately, is no,
• Negotiation doesn’t really come into play when you’re buying a new condo.
• Unlike the souks in Marrakech or the spice bazaar in Istanbul, long to-and-fro conversations about price are pretty much non-existent.

Instead, the developer sets a price for each unit based on a tier structure, with the building’s location and construction, and the unit’s size and location in the building having the biggest effect on the asking price. Condo developers generally do everything they can to avoid price reductions, with one price cut given to one buyer possibly going on to affect all future buyers and developments.

Condo fees paid in advance Legal fees paid or delayed Utility installation and hookup paid or delayed Free construction upgrades Access rights to amenities, parking, and storage Capital contribution to the contingency fund Furniture and appliances

While some of these concessions can be negotiated to some extent, once again, developers are normally keen to apply the same concessions to all buyers due to the huge scale of condo projects. Many of these concessions are hard to find out about, with potential buyers only learning about the benefits of one condo over another when they research buildings and go through a detailed comparison checklist,

• The earlier you enter a pre-construction project, the greater leverage you’re likely to have in terms of concessions.
• Other elements of a condo purchase can also be negotiated to some extent, including the deposit amount and installment structure, cooling off periods, and in the case of delays.
• It’s also important to ensure that the developer is reliable when it comes to completion dates, able to answer your questions about rules and regulations, and willing to meet your property inspection needs.

While traditional negotiation is mostly out of the question when it comes to, there are other ways you can save money. Choosing a building with lower monthly condo fees can save you money each and every month, so take some time and rethink whether you need all those amenities.

Can you negotiate price on presale condo?

Financing on Pre-Sale Condos – Add a 5% GST to the final sale price, The price you see online, or the price given to you at the Sales Centre, will require an additional 5% GST tax. Developers Might Negotiate. It’ always worth trying! If the development is in high demand and it was recently released for sale, they may not negotiate, but if they have already started construction or are almost done, they may be more willing to negotiate.

1. Sometimes Developers offer “decorating allowances” rather than price drops.
2. For example, this means that instead of lowering the price by $10k, they’ll offer you a “decorating allowance” of $10k which is a credit you receive upon completion.
3. This allows the Developer to advertise the sale as full price without having to disclose to other Buyers that the final price was actually $10k less.

Sketchy, but it happens. If they don’t negotiate the price, they might be willing to negotiate certain upgrades. Developers Increase their Prices as the Construction Continues, At least, this has been the case for the last few years as the Real Estate Market has been increasing.

• The least expensive time to buy a unit is before the Developer starts constructions, as the prices typically increase as more units that are sold and as construction progresses.
• I’ve had some luck with Buyers purchasing the last unit for sale in a building once the building because at that point the Developer is eager to close the file on the development.

Financing will only be a pre-approval, With regards to mortgages, Buyers can receive a pre-approval that they qualify for a mortgage on the property, however, the mortgage doesn’t kick in until the unit is finished years later. This means that if your financial situation changes (i.e.

• Lose your job or lose your down payment, or buy a second property in the meantime) you may no longer qualify for the mortgage – however – you’ll still have to complete the purchase of the property.
• Eep in mind that new Government Policies or Mortgage Rules can seriously affect your affordability, and what rules might be different at the time of Completion can be hard to predict if it’s still years away.

A few months before the completion of construction, you can lock in a pre-approval. Learn the Deposit Structure, New Developments have a different deposit structure than a typical purchase, which is outlaid in the Disclosure Statement. Typically, the Developer will ask for 1% of the purchase price upon signing the contract (you’ll get this back if you don’t go through with it), another 9% of the purchase price after the 7 day due diligence period, and then a further 5 or 10% a few months later.

Do you pay HST on pre-construction?

The down-low on HST – When you buy a pre-construction condo, HST needs to be paid. The amount will be 13 per cent of your purchase price (5 per cent for GST, and 8 per cent for PST). How that impacts your closing costs will depend on whether you’re planning to live in your condo, or rent it out.

1. The good news is, you can get all (or in rare cases, most of) your money back either way.
2. First off, builders usually include the rebate in their pricing.
3. So if you’re considered an “end user” (which means you or one of your direct relatives will be living in the unit), you’ll get it right away through a reduced purchase price.

If you’re an investor who’s planning to rent out your unit, you won’t qualify for the built-in pricing. For units under $350,000, you’ll pay 7.8 per cent of the tax at closing. For those over $450,000 you should be charged precisely $24,000. Fortunately, once you can prove that you’ll be renting your unit out for at least a year (by providing the Canada Revenue Agency with a solid lease agreement), you can apply to get the amount you’re charged back!

Is it profitable to flip a condo?

Aspiring real estate moguls may consider flipping condominiums to make a significant profit quickly. However, flipping condos in the Philippines does not appear to be as simple as most people believe. Profiting from this type of business is never simple or quick.

1. Yet still, even with challenges, condo flipping can be profitable.
2. It is more than just cleaning the condo unit, repainting it, enhancing the condo inside, and selling it.
3. Many processes must be completed before a substantial profit may be generated.
4. A savvy condo investor should know the best moment to sell and have sufficient funds to do so.

But, if you’re still a novice searching for the most acceptable ways to get started in this line of work, here are a few things to consider before flipping condos for profit.

Is it worth flipping a condo?

The bottom line – Flipping condos can be a great way for new real estate investors to get started. The property purchase price and renovation costs are often cheaper, the risk of unforeseen structural problems is far lower, and there tends to be less direct competition from other investors.

Still, flipping condos is not identical to flipping detached single-family homes or multi-family units. There are a few differences that investors need to understand before buying, including condo association costs and rules. Pay particular attention to condo association rules pertaining to renovations, and speak to the chairperson of the condo association before buying, as a safety precaution.

Some associations are friendlier toward flippers than others and are more enthusiastic about renovation projects. Remember, you can use the same funding options for flipping condos as you can for flipping townhomes and detached homes. Through a hard money lender like Kiavi, you can finance up to 90% of the purchase price and 100% of the renovation costs,

How long should you live in a condo before selling?

As a REALTOR® might tell you, in order to make up for closing costs, real estate agent fees, and mortgage interest, you should plan to stay in a property for at least 5 years before you sell your home.

How do pre construction condos make money?

How Does Pre-Construction Condo Investing Work? – Pre-construction condo investing works by deferring the value of current money into the future, In other words, you buy an asset at current prices and when you take possession years later, it gains in value. Depending on the neighborhood, that increase can be significant. This increase is where money is made (or lost).

What is the lifespan of a condo building?

How Long Do Condos Last? – The majority of condo apartment buildings today have the design and construction made with advanced processes and durable materials to resist daily stress and strain. Many people like modern condominiums even after 50 years as they stay in good shape.

• When talking about the lifespan of condos from the real estate and land value point of view, it will continue to exist as a real-estate ownership option as long as buyers are willing to purchase them.
• A condo unit will continue to be a feasible property ownership option as long as its monthly maintenance fees and realty taxes remain less than the monthly rental of an equivalent individual unit in another apartment building or condo complex.

There will be no desire to buy the apartment once the realty taxes and required maintenance costs exceed the cost of a comparable unit. Even if a condo building is more than 50 years old, it does not become obsolete or uneconomical if it passes building inspections and certifications.

The majority of today’s new condominium developments use cutting-edge technology and long-lasting materials to withstand the wear and strain of everyday use and therefore, maintenance fees will go on the lower side. Even after 50 years, modern condos are likely to be in good form. Destruction would be unnecessary if the majority of residents consider the building structure is safe and sound.

Thus, requiring occasional maintenance and some modern restorations.

How do I get out of a pre-construction contract?

No, you cannot back out of a new construction home contract, because it is a legally binding contract between the builder and the buyer. However, there are some options for the buyer to take on a loss and move on without the new build. It’s common to see people wanting to back out of a new construction home contract.

It happens with many new construction developments. A new construction home buyer needs to read the contract in detail before signing it – understanding the ways in which the buyer and builders are protected. As these purchase agreements are written by the builder’s lawyers – they will be highly favorable to the builder.

In some cases, a home builder can cancel a contract as well.

How long do you have to live in a new build before you can sell it?

How quickly can you sell a house after buying? The general rule is six months — because that’s how long many lenders will need a property to be registered before they’ll issue another mortgage on it — but it’s all down to your individual circumstances.

Can you negotiate pre-construction condo prices?

Can you negotiate new condo prices? — Condo.Capital When you buy a new or pre-construction condo, there are lots of things to think about and lots of issues to consider. From the building location and type of unit through to the amenities and utilities, it’s important to to find the perfect option for your needs.

As always, price will be the most crucial factor in your decision, so you’re probably wondering if negotiation is an option. The short answer, unfortunately, is no, Negotiation doesn’t really come into play when you’re buying a new condo. Unlike the souks in Marrakech or the spice bazaar in Istanbul, long to-and-fro conversations about price are pretty much non-existent.

Instead, the developer sets a price for each unit based on a tier structure, with the building’s location and construction, and the unit’s size and location in the building having the biggest effect on the asking price. Condo developers generally do everything they can to avoid price reductions, with one price cut given to one buyer possibly going on to affect all future buyers and developments.

Condo fees paid in advance Legal fees paid or delayed Utility installation and hookup paid or delayed Free construction upgrades Access rights to amenities, parking, and storage Capital contribution to the contingency fund Furniture and appliances

While some of these concessions can be negotiated to some extent, once again, developers are normally keen to apply the same concessions to all buyers due to the huge scale of condo projects. Many of these concessions are hard to find out about, with potential buyers only learning about the benefits of one condo over another when they research buildings and go through a detailed comparison checklist,

The earlier you enter a pre-construction project, the greater leverage you’re likely to have in terms of concessions. Other elements of a condo purchase can also be negotiated to some extent, including the deposit amount and installment structure, cooling off periods, and in the case of delays. It’s also important to ensure that the developer is reliable when it comes to completion dates, able to answer your questions about rules and regulations, and willing to meet your property inspection needs.

While traditional negotiation is mostly out of the question when it comes to, there are other ways you can save money. Choosing a building with lower monthly condo fees can save you money each and every month, so take some time and rethink whether you need all those amenities.

Can I sell my condo before 5 years?

Sellers Stamp duty or financial penalty is payable if you sell your private property before 3-4 years ownership has past.


Nehru Baral