When it comes to purchasing a condo unit, a lot of my buyer clients ask me which is the better selection, buying a resale or pre-construction unit. The distinction between the two being that one already physically exists and the opposite one does not. Deciding which path to take depends on a number of factors akin to timeline, motive and capital.
When buying a resale rental unit there aren’t any surprises; what you see is what you get. You understand precisely what you are stepping into as you can physically go to the unit, see what finishes have been used, understand how the management is running the building, etc. Typically speaking, objects resembling window coverings, light fixtures and built-ins are left behind by the sellers which are a bonus. Another optimistic facet of buying resale is that a buyer is able to go to multiple units in different places before making a choice to see which one greatest suits their needs. The down side of resale is that you are not the first owner of the unit and a few prep work of the unit could also be required earlier than move in.
However, when buying a pre-construction rental unit, you are essentially buying an idea and never a tangible merchandise because the condominium does not physically exist yet. Instead of visiting the unit, you visit the sales middle where you buy off of a ground plan where you could visualize the house you might be purchasing. The nice thing about shopping for pre-construction is that you are the primary owner and everything is brand spanking new. By the point the builder has sold enough units to begin construction and construction has been completed, it isn’t until years later that you are truly able to move in. If you’re looking to move into a condominium unit instantly or within a short time period, then resale is the best way to go but if you’re able to wait just a few years and have a flexible timeline then pre-development might just be what you’re looking for.
The next thing to consider is motive. What is your reason for purchasing a rental unit? Is it to reside in or to flip? When buying a resale condominium unit, you may potentially move in instantly whereas in the event you buy pre-building you should be affected person and versatile as the unique occupancy date will most probably fluctuate. If it is an funding that you want to get into then pre-development could just earn you that further money you are looking for. When buying pre-construction, you purchase at at this time’s market value so depending on the market situation once you buy versus while you sell determines whether you make a profit or loss.
Finally one of the crucial important parts of buying a condominium unit is the fee and in case you can afford the financial obligation. In both situation, a down payment must be made. In resale, on average a 5% down payment is given as a deposit with the offer. Relying on what has been arranged with the bank, an additional deposit is paid to the bank upon unit closing. This deposit amount can differ from 5% down to a hundred% down, in which case a mortgage wouldn’t be required. While you buy a pre-development unit nevertheless this flexibility isn’t allowed. The builder has strict deadlines when deposits should be made. Often a deposit is made with the preliminary signing of the documents, one other one upon closing after which a couple of others in between which often totals about 25% down.
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