Tips on How to Buy The Best Condo in Toronto

Today, condos make up the major portion of new domestic units being built, and perhaps surprisingly, the cost of units is still competitive when compared to a single family home. For some, the condominium lifestyle is becoming a more compelling choice; for others, it is the only means they can become homeowners in the pricey Toronto real estate market.

Consider these tips when looking at a condo in Toronto

Collaborate with a seasoned, specialized lawyer

From double-checking your purchase and sale agreement and suggesting potential alterations, to simply working on the closing costs on your behalf, a lawyer with expertise in pre-construction condominium contracts will assist you in navigating the tedium and precision in making such a significant purchase. A comprehensive pre-construction condo contract, with all of its amendments and proper documentation, can be hundreds of pages long. This is not light reading!

Be sure your contract has an assignment clause

Having an assignment clause is a wonderful addition, since it permits you to sell your contract to another buyer before the date of occupancy. This option is especially relevant to buyers pursuing a return on investment in the short term. It is advisable to talk to your pre-construction contract lawyer first, however, as there is typically some fine print to deal with that may limit your re-selling options.

Sizeable Dens

Often, buyers will convert a large study, or den, into a spare sleeping space. This is by far one of the most efficient and economical methods of increasing your condo's value. An increasing number of families are purchasing condos as they get priced out of the market for detached, or even semi-detached, homes. As in investor, or potential seller, adding a second or even third bedroom means that more tenants, and a greater demographic of potential tenants, will be attracted to the space. Thus, when reviewing condo spaces, be attentive to units with dens that are large and could be converted into sleeping quarters. The low overhead of conversion makes the potential yield considerable.

Shared amenities

The majority of condos constructed over the last 10 years have been built in the context of larger developments. This means each unit may share a common amenity space. This is a cost-effective means for owners to profit from these same amenities while deferring a large share of the cost among other residents. An added plus is that these larger amenity spaces tend to receive more frequent traffic and as a result, are more highly maintained than amenity spaces in smaller buildings.

Know how deposits work

It is standard across the industry that pre-construction condominiums require a 20 per cent down payment. The vendor provides the deposit structure, which will make clear the frequency and date of the deposits.

As an example, one might put 30 per cent down over the first year, and pay off the remainder at a reduced rate over the next three years, or have the payments structured so that the property will be payed up after two years.

The advantage of a 20 per cent or higher down payment is the power of leverage. As an example, if you were to purchase a pre-sale $650,000 unit with a 20 per cent down payment, assuming that the average rate of real estate inflation continues to climb by 5 per cent per year, at the point of completion four years later your condo is now valued at $790,080. And voila, a $140,000 equity head start (which an assignment clause allows you to capitalize on) and your return on investment is around 108 per cent! Leverage allows you to amplify your ROI before you, as the homeowner, live there at all.

While it is common to worry or complain about the huge number of new condos being constructed in Toronto, we should instead value our vertical city. As condominium ownership becomes more common, the websites like www.condoessentials.com allow the buyers to be more in the know about what makes a unit, a building, or a complex really shine, and that will help to ensure that you make a wise decision when purchasing a condo in Toronto