Building a new house takes time, and when you purchase a new house directly from the developer before it’s built, it is known as pre-construction. Pre-construction properties can include houses, townhouses, or condos, and investing in them can have many advantages. However, it’s important to follow some best practices when buying pre-construction properties.
One advantage of pre-construction properties is the potential for appreciation without a mortgage or tenant. Real estate in the Greater Golden Horseshoe market has consistently appreciated year over year, with an average Y2Y house value increase of about 8% over the past 20 years. With pre-construction properties, you pay the deposit over multiple years, and some projects require only a low deposit amount. While waiting for the completion of the pre-construction property, it will most likely appreciate, and your property will appreciate before your mortgage even starts. Additionally, there are no tenants to handle.
Another advantage is the new home warranty provided by Tarion. Developers building new houses or condos are required to obtain Tarion, a not-for-profit consumer protection organization established by the Ontario government to administer the province’s home warranty program. When you buy a pre-construction home or condo with Tarion, you can rest easy knowing that everything will be in working order. Tarion website is found here. https://www.tarion.com/homeowners/your-warranty-coverage/warranty-outline