Which is Better: Pre-Construction or Re-Sale Condos?
There’s a new trend in the Toronto Real Estate Market:
Pre-Construction prices have now surpassed Re-Sale prices.
What? How can that be?
Traditionally, Re-Sale condos prices have been priced higher than pre-construction (and assignments). The reason is that, it is deemed “safer” to buy a product that you can see, touch and feel.
I recall starting in Real Estate, buyers would tell me, Yossi, we do not know the builder, the area is so-so, how can we know that the product that we are going to get is any good? maybe it won’t be finished on time, or perhaps not completed at all!
What’s Hot Today?
They would tell me, Yossi, when I buy re-sale condos, I know what I am getting: I can inspect the condo, see the colors and check everything, I can tell if the building is well maintained, and I don’t have to pay crazy development fees. Why would I pay that at all?
True enough, I would say. You see, there is risk associated with committing to buy a half a million dollars worth of something that you cannot see! Currently is a parking lot, or an old building, or a field.
Why Re-Sale Used to Cost More than Pre-Con:
That is why Re-Sale condos were selling for MORE than Pre-Construction. Because the assumed risk was less. You know what you’re getting, you know the exact condo fees and maintenance, you can check everything to your satisfaction, or find another property.
Less Risk = Higher Price.
More Risk = Lower Price
So Why does Pre-Construction Costs MORE than Re-Sale?
Today, Pre-Construction vs. Re-Sale prices have flipped. Pre-Con costs MORE than re-sale. For example, downtown Toronto condo prices (re-sale are now hovering around the $1,000psf. Pre-Construction in the same areas will cost you $1,200-$1,800. That’s 20%-80% MORE! Crazy!
The answer is simple: it is all in the mind’s eye, or in our case, in what investors perceive to be “better”. These days, many investors are “riding the wave” of appreciation. They want to find a good home for a bit of cash, usually in the $100,000 range. They want to park that money, and in two or three years, make great return on it.
The best and safest returns have been, so far, condos.
The returns on deposits for Pre-Construction have been 50% – 200%, and most investors have more than doubled their money in 2-3 years.
No other financial “product” can surpass the yield that pre-construction condos have yielded. Banks will give you a meager one or two percent – what a joke!. Stocks are simply too risky – “investing” in a company really means giving your money away to a bunch of suits and you have no clue what they are going to do with your money. You know that they will have a great time at the steak house and gobble a few drinks, while enjoying fat salaries. That is to me the riskiest and lamest investment one can make.
The stock market can wipe over night (so does Crypto)… but when you own REAL ESTATE, you have brick and mortar home you can live in, or rent to others.
These homes and condos we own provide us with stable income. We know the expenses and we know the returns. We can calculate future value in high accuracy. We can predict our income. We can plan for the future.
How to Invest in Pre-Construction Condos
There’s a process to everything in life. This process will get you to where you want to be, faster and with much less effort. When you look for a shortcut, you’ll pay the price. Why? BC those who followed the process which has already been optimized, have purchased the best and cheapest units, and those who are “still thinking” get the scarps… not the best units and at higher price. That’s how the world works. Some people get that right away, and some take a few hits to get in line. That’s OK, we each have our ways to reach our goals.
The Best way to get the best and least expensive properties, is to register with me. You’ll get on my list, and I’ll notify you, and all my registered investors, about various opportunities such as:
- Private Deals
- … and others
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