To fund these developments, prospective condo owners have the option to pre-purchase units before they’re even built. These units are commonly referred to as a pre-construction. If played right, a pre-construction can be a fantastic investment.

This post is all about pre-constructions. It discusses the benefits and cons of purchasing one, how the buying process works, and what questions to ask before signing the purchase agreement.

The Pros and Cons of Buying a Pre-Construction

The value of pre-construction condos is hotly debated due to the various pros and cons. Because pre-constructions are not built yet, it’s an opportunity to purchase a condo in the future at today’s prices. Although you need to pay a deposit and downpayment now, these costs are more manageable than the downpayment and mortgage of a resale property.

Another advantage of a pre-construction is the ability to customize your unit, meaning you can choose the countertops and appliances in the unit. Speaking of appliances, purchasing a brand new unit means that appliances, cable wiring, alarm systems, and other fixtures are all brand new. The need to replace these fixtures likely won’t appear for the next decade.

Although these units may look like the greatest purchase ever in the showroom, there are a lot of downsides to them. First, what you see in the showrooms and in the sales brochures are often not the reality of what you get. These marketing materials are made to give you the best impression of the product. It’s common that maintenance fees are skewed towards the low-end and that completion dates are optimistic. So, if this is an investment property, it’s hard to tell what your expenses will be or when you can expect to start renting the unit out.

What’s worse than a delay is the potential that a pre-construction is cancelled entirely. This occurs when developers can’t secure financing, have zoning issues, or can’t secure enough pre-construction buyers, among other reasons. Though with variation province to province, you would get your deposits back in this case, of course.

Lastly, there are various fees, aside from the purchase price and condo fees, that you need to account for. There are not only closing costs, but also fees unique to new developments such as development and education charges. Even items such as the installation of water and gas metres may be part of your bill. This ultimately depends builder to builder.

The Purchase Process

How to Pay for a Pre-Construction

One of the biggest drawing factors to purchasing a pre-construction is that you don’t need to pay the downpayment all at once. It’s made in staggered payments, which vary builder to builder. One example could be

• 5% of the purchase price with offer
• 5% of the purchase price after 30 days
• 5% of the purchase price after 90 days
• 5% of the purchase price after 180 days

When paying a 20% downpayment, it’s much easier to pay the amount over half a year than all at once. This gives you the opportunity to secure the unit with only 5% of the purchase price.

Cooling Off Period

To make sure you’re not forced to make a decision due to the limited supply of units, some provinces regulate a “cooling off” period after you pay your deposit for a pre-construction. In Ontario, this is 10 days while British Columbia allows for 7 days. During this time, you can renege the purchase agreement without consequences.

The cooling off period is also an opportunity to do your due diligence on the pre-construction. This means bringing the paperwork to your lawyer to check for any red flags. The period also allows you to find financing for the rest of the purchase price.  

The Questions You Need to Ask before Buying

Who’s the builder? A condo developer’s reputation is one of the most important factors in buying a pre-construction. Due to the demand for condos in major Canadian cities over the past few years, many new builders have joined the game. These builders have plenty of capital and leverage but often lack experience, which results in a poor end product. It’s best to find someone with a good reputation who has had past projects with satisfied tenants. Researching the builder can also provide insight on how long their past developments were delayed for and if they delivered on the promises made in sales brochures and showroom floors.

Who are you buying this unit for? Are you buying the condo for yourself, for a long-term rental, or for a short-term rental? Make sure to check the condominium by-laws to see if short-term rentals are even allowed. If you’re purchasing for yourself, could you tolerate potential delays or not knowing who your neighbours will be?

Location: Of course, location is important. But keep in mind whether the area is somewhere renters want to live if you’re purchasing as an investment. It’s also good to look into whether the surrounding areas have been approved for development. It would be horrible to purchase a pre-construction only to discover a chemical plant is being built right beside it. Lastly, what’s the location prospected to be like by the time the development is done? Is the area going through gentrification or heading downhill?

A pre-construction condo can be a great investment. But make sure to keep in mind the benefits and downfalls of purchasing one. The payment structure and cooling off period are handy tools in the buying process, though you must make sure to ask who the builder is, who you’re buying the unit for, and about the location you’re buying into.

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Enlisting the help of a realtor could solve all these issues. In this article, we explain how a realtor provides access to rentals that you can’t find yourself, helps with the heavy lifting in finding and securing a new home, and provides valuable expertise in the rental process—especially if you’re moving to a new city. The best part is that it won’t cost you a dime.

Access to exclusive listings through MLS

You may be looking to rent an apartment by scouring websites such as Kijiji or Craigslist to find that perfect deal. In markets with low vacancy rates, this is a nightmare. Often, the second a rental is posted, dozens of prospective tenants call in. By hiring a realtor, you avoid these issues.

Although MLS is publicly searchable through Realtor.ca, there’s a 48-hour lag before non-realtors can see these listings. Thus, in cities with low vacancy rates, it’s common for the listing to be already gone by the time the public can lay eyes on it.

Helping with the nitty-gritty of renting

If you live a busy schedule, your real estate agent can also help with the “heavy lifting” of finding a property. This includes finding an available property and closing your rental agreement with the landlord.

After telling your realtor what you’re looking for and your price range, he/she can sift through the hundreds of listings on MLS and other sources to find the perfect fit for you and arrange viewings. They’ll also drive you around to view each place! This can save valuable time that would otherwise be spent calling landlords to set up an appointment to view the property and scouring the internet for your next home.

If you think you’ve found the home or apartment of your dreams and want to make an offer, the advantages of a realtor continue to shine. Because agents deal with rentals so often, they know exactly what the process is, what forms you need to fill out, and what document to provide the landlord. They can help you source papers, such as an employment letter when requested by the landlord.

An agent provides insight into both the rental process and the local real estate market, which is critical when you’re moving somewhere new.

Their expertise can cut out rental listings that are sketchy. The agent also understands your rights as a tenant and makes sure that landlords don’t do illegal acts such as ask for a security deposit in certain Canadian provinces. These two benefits can help save you from common rental scams, something that’s becoming more common as property markets get more competitive.  

Ultimately, your realtor is there to look out for you. He/she can pick up on uncommon or illegal clauses in the lease agreement that you may not entirely understand. And due to their knowledge of the local market, they know or can find out if certain buildings have a bad reputation. For example, some condo buildings may have a history of cockroaches or moulds or were designed by a developer with a reputation for low-quality products.

If you’re moving to a new city, it’s better to hire an agent who knows the market than bothering your one or two friends who live in the city, asking them about every neighbourhood. Real estate agents know their city and the neighbourhoods well. They understand which neighbourhoods are ideal for you, whether their family-friendly, commuter accessible, and much more. They can also prevent you from taking that value listing that turns out to be in the rough part of town.

You don’t pay—so what’s in it for the realtor?

There are many realtors who won’t touch rentals. Other just don’t advertise the fact that they do work with renters. The commission for rentals is much lower than if the agent had sold the property to you. While you, as the tenant, don’t have to pay anything, the landlord usually pays a commission valued at the first month’s rent. This commission is then split between the landlord and the tenant’s agent and any brokerages they work with. So, an agent would ultimately have to take on a considerable number of deals to turn a profit.

So why would real estate agents even help a renter? It’s usually to build a client base and hope that today’s renters become tomorrow’s homebuyers. If you’re satisfied with your rental, you’ll likely go back to the same real estate agent when you buy a home, and this is where the agent would profit. Better yet, you may even refer some of your home-buying friends and family to the agent. This is why, despite the fact that helping you find a rental is unprofitable, a good real estate agent still puts their best foot forward, hoping that your satisfaction makes them a hefty commission down the road.

If you’re looking for a rental property in a market with a low vacancy rate or in a city that you’re not familiar with, then hiring an agent is a must. Even if you aren’t in one of these situations, hiring an agent is still beneficial and likely costs you nothing. So why not take the chance?

The post Should you enlist the help of a realtor to find your dream rental? first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

Keeping safe from Coronavirus is difficult for the over 1.9 million Canadians living in condos. One condo building in Calgary has seen the worst of this, as they reported 32 cases of Coronavirus in June. In this article, we provide tips on how to minimize your chances of contracting COVID-19 if you live in a condo building. We explain what condominiums are doing, or should be doing, to prevent a full-building infection and review what you can do as a tenant to avoid being infected.

What Condominiums Are or Should Be Doing

Your condominium building has a responsibility to prevent the building from a COVID-19 outbreak. Most condo corporations have done their part through additional cleanings, closing off certain areas, and communicating reminders and information to tenants.

Additional Cleaning and Sanitation

Like restaurants, malls, busses, and more, condo buildings must sanitize regularly used areas more often to prevent a Coronavirus outbreak. This is especially true for objects such as door handles, stairwell railings, elevator buttons, and more. Additionally, the cleaning supplies that your building uses should no longer depend on scent and cost, but its ability to kill bacteria.

It’s also essential that your building provides its residents with easy access to sanitation, such as hand sanitizer. We may lose track of what we touch and end up with germs on our hands. But if your building has hand sanitizer stations at key areas, it’s a reminder to sanitize our hands.

Closing Off and Restricting Common Areas

Condo residents spend a lot on their condo fees. These fees usually go to amenities such as the pool, gym, and concierge. Although there’s a particular entitlement to these amenities because of condo fees, your condo should stop access to pools, gyms, and other non-essential facilities. These areas are prime for COVID-19 spread. As infection rates slow down, your building may reopen these amenities, but they should do so carefully. One common trend with gyms reopening is for members to book time slots so that the space is not overcrowded. Each time slot should also have space in between for sanitation. Condo buildings should look to do the same with building amenities.

Although the management office was once a place to socialize with your building’s staff or ask questions and file complaints, your condo should restrict access to these areas. You and other tenants can still ask questions or file complaints via phone or email, where the risk of Coronavirus transmission is nil.

Communication with Tenants

Your condo building should communicate with its tenants on multiple fronts. First, although we’ve been told again and again to wash our hands, social distance, and wear masks, it won’t hurt for signs in your condo building to do it again. Everyone forgets, and a reminder is better than a case of COVID-19. If your building isn’t already doing this, it’s an easy suggestion for your condo management.

Your building should also inform everyone about the initiatives they’re taking to prevent the spread of Coronavirus and if there are any possible cases in the building. This information should be available through emails, if your building has your email, or through signs in the elevators or main areas. It’s imperative to know if someone in your building may have COVID-19 so that you can self-isolate.

Personal Safety Precautions

You’re ultimately responsible for yourself in avoiding COVID-19. While going through your building, whether it’s to leave or to come home, it’s important to sanitize your hand and wear a mask. Elevator etiquette has changed in the COVID-19 era, and it’s important to understand what new etiquette entails. 

Personal Sanitation and Wearing a Mask

Standard COVID-19 measures should apply in your condo building, even if it’s your “home”. This means you should avoid touching anything and everything. To open a door or press a button, carry a napkin so you don’t have to touch the object. Your shirt sleeve or elbow will work too – as long as you’re using something that doesn’t make contact with your face. Furthermore, though, ideally, your condo building has hand sanitizer stations around key areas, it’s always better to carry your own bottle.

When you’re in the lobby or a common area of the condo building, make sure to wear a mask. Some cities are even taking steps to mandate mask-wearing in condo buildings. Your mask shouldn’t come off until you’re in the comfort of your condo unit.

Elevator Etiquette

Elevators have been a key concern in the COVID-19 era. Elevators don’t allow for social distancing due to being confined in a small box with multiple people. Others may have also contaminated the area by touching buttons or holding onto railings.

Again, it’s important to avoid touching buttons with your hands. Your hands may touch your face or rub your eyes, which can allow the virus into your body. If you see a crowded elevator that won’t allow for social distancing, it’s better to take the next one or the stairs

Although you’re used to your whole condo building being your home, be cautious during this time. Learn about your condo building’s initiatives to protect its residents by emailing or calling management. For yourself, assume that everything outside of your condo unit is infected with Coronavirus so that you’ll take the necessary precautions.

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If you’re a real estate investor or just have a child heading off to university, buying a property in a “university town”, where prices are often lower than major cities like Toronto or Vancouver, can be enticing. While the average price of a home in Toronto is roughly $920,000, an average home in London, Ontario (home to Western University) is almost 1/3rd of that at $344,815.

In this blog post, we explain the benefits and downfalls of investing in student housing. This post clarifies some myths of the opportunity, and explains what to keep in mind when investing in a property targeted at student tenants.

The benefits of student housing investments

Student tenants. You’re effectively renting to someone with no credit history, plenty of debt, and no full-time income. Or are you? Although this profile is common for students, it’s also common that the student’s parents pay most or all of their rent and expenses. And with a parental guarantee that rent will be paid, this tenant turns into a secure source of income, even less risky than someone who may have a full-time job. This is why a risk-averse investor such as the Canadian Pension Plan is willing to invest in it.

A property close to a university may also mean guaranteed tenants. One article found that only 3% of Canadian students lived in university-provided housing, with the remaining 97% commonly living with parents or at nearby rental units.

There’s no shortage of university students. In recent years, international students have enrolled in Canadian universities at an increasing rate. Other countries that were once popular for international students such as the U.S. and the U.K. have had unfavourable attitudes towards immigrants in recent years, which has resulted in more interest in Canada. This is why among new Canadian non-permanent residents, international students were the largest contributor.  The best part is that each of these students needs a place to live. Thus the growing number of international students has made student housing more popular with real estate investors.

As mentioned prior, student housing often has a lower barrier to entry than a condo investment in downtown Toronto. Although cities such as Waterloo, Ontario, or London, Ontario, are seeing real estate values appreciate, they’re still much more reasonable than what you would find in Toronto.

The pitfalls of investing in student housing

Student housing isn’t all rainbows and sunshine. Although it’s a secure investment for the most part, some aspects of it can make it particularly tough. Students may not care about the property as much as a tenant who is older and more mature. University house parties run rampant as part of the school culture, dirty dishes are usually left in the sink for weeks, and there’s often plenty of alcohol and drunk students around. This could result in damage to the house or other issues like mould or vermin.

And if you’ve purchased a property that’s in a different city that’s an hour or more away, common tenant issues are even more difficult. Toilets and drains get clogged, heating systems might break, or a window can crack. These all require your immediate attention. To prevent a 2-hour drive in the evening to fix a clogged toilet, it’s a good idea to keep some local plumbers or repair people in mind. Better yet, you could simply pay a property management company to take care of everything for you (but you remember that this would eat into your cash flow).

What to keep in mind when you purchase a property targeted at student tenants

Students are a different but similar ball game to regular tenants. You often hear investors mention the number of “beds” they own, which refers to how many tenants they can accommodate. To maximize your returns on a student housing investment, you want to maximize the number of students living there (within reason). This doesn’t mean covering every square inch with a bunk bed. However, a 3-bedroom house could be made into a 5-bedroom by adding two rooms to the basement.

Students may be cheap, but they still desire good living accommodations. In fact, student rentals are more often going towards the luxury-end now. Well-off international students who can afford to study abroad want high-end living accommodations, and as more of these international students choose Canada as their next educational venture, this demand increases.  It’s all about finding a balance between maximizing tenants while having a luxurious living space.

If you plan to renovate a property before listing it for tenants, there are a few items to keep in mind so that the space is suitable for students. This includes using quality, but not particularly high-end, installations like sinks or toilets. Most of the cost for renovations comes from the cost of labour, so why cheap out on a few hundred dollars on a sink that lasts longer? Materials such as laminate or vinyl tiled flooring are also solid and cost effective.

Do your renovations during the summertime when students aren’t around. You can even stagger them year to year. If you have a renovation that requires clearing the whole house, you could list your property for an 8-month lease instead of 12. Although you’re losing out on 4 months of rent, you can charge more during those 8 months, since 8-month leases are typically more desired by students.

Students are great tenants to have. Although they lack credit scores or full-time incomes, it’s usually their parents paying the monthly rent. The increasing number of international students also means that there’s no shortage of students looking for housing accommodations. Although partying and managing a property in a different city may be difficult, it can be worth the stability. Make sure to find a balance between creating a great living space for students while also maximizing how many tenants you can have in a house.

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If you are thinking about renting a condo or home, you may want to consider enlisting the help of a real estate agent. Real estate agents can help you identify properties that meet your needs (one with a driveway, backyard or easy access to transit), while identifying any potential pitfalls of a neighborhood or area.

In addition, many homeowners are now using agents to facilitate their home rental. They may enlist the assistance of a real estate agent to help screen potential renters and have them organize showings of the property. To see these properties it is best if you have an agent that can organize a time for you to see the space and can provide you with unbiased advice about what you have seen. Real estate agents can also ensure you are paying a market acceptable amount for a property by negotiating rental agreements.

The rental unit owner covers agent fees. The landlord who lists his property with the listing brokerage has agreed to an upfront commission to be shared with the listing brokerage and co-operating.

Using a real estate agent can help you start building a foundation with someone that you may want to use again in the future for another rental or when looking to purchase a home. Having an agent who helps you find a place to rent can open doors to new properties, and can also help you find a hidden gem rental that you may have not noticed on your own.

To find a professional to work with, read unbiased and verified reviews on https://rankmyagent.com

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