Tips for beginner preconstruction investors in Toronto

by Kandace Gallant on 30 Oct 2020

Despite experts predicting a market crash in our midst, robust investment opportunities are still out there, including for beginners looking to dip their toes in the water.

Real estate investing can be a rollercoaster, and perhaps it’s not for everyone, but it can also help people get head starts on their retirement funds, especially considering future generations will continue paying more for starter homes. For that reason, professional guidance is of paramount importance.

“With COVID-19, it’s actually a good time to invest because there are opportunities available that we haven’t seen in a long time,” said Matt Elkind, managing director and partner of Connect.ca. “If there’s a distressed seller or they’re forced to exit quickly, that might present a great opportunity for someone else. Might there be bumps along the way? Of course. But, long-term, real estate is a great investment and there’s been great inflation, specifically in Toronto.”

There are many ways one can invest in real estate, but, rather than search for investment properties blindly, ascertaining one’s goals ahead of time is pivotal. As Elkind noted, every investor’s goals are personal, but one commonality they share is knowing what type of investment property they want to purchase, like a preconstruction condo or a townhouse.

“Take advice from successful real estate investors or anyone that knows what it’s like,” suggested Elkind. “They’re great to take advice from, not a family member or your aunt who isn’t well-versed. You see it happen all the time. Research investors and real estate professionals who have a track record and experience, and are able to demonstrate finding a great investment opportunity.”

Other questions Elkind suggested asking yourself include: are you looking for capital appreciation? Are you looking for income? Are you looking for something easy to manage? What kind of effort level do you want to put into it?

Toronto’s condo market is the country’s largest, and both price points and convenience matter to investors and renters alike, especially in the preconstruction segment. As reported by GTA Homes, the average preconstruction condo in Toronto last year cost $485,650, and the price per square foot was $883, while the average price of a resale condo was $679,182 in Q2 2020. Even when it comes to resale units, the help of a real estate professional is crucial.

Which of Toronto’s neighbourhoods are you most likely to get the biggest return on your investment (ROI)?

“Up-and-coming neighbourhoods are always where people experience the most ROI,” said Elkind. “Neighbourhoods that are going through transformations, like Dufferin and Dupont or the Queensway, as well, so when we see less desirable neighbourhoods turn into a desirable neighbourhood, we see a much higher ROI.”

But on top of asking yourself what type of property you’re looking for and what level of commitment you’d like to make, you also need to know as much information about the builder as possible. Every builder has an online presence where you can read both positive and negative reviews and browse through their past projects.

“In terms of researching for reputable builders, look at the track record they’ve built,” said Elkind. “Some of them have won different types of awards and if you’ve been in a unit you like yourself, that’s often a good sign.”

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