Real Estate

Is it stupid to buy a pre-con condo?

  • Last Updated:
  • Sep 6th, 2017 12:07 am
[OP]
Member
Jan 15, 2013
236 posts
9 upvotes
Oakville

Is it stupid to buy a pre-con condo?

I was just wondering if it stupid to buy a pre-construction condo

I own a 1+1 bed condo right now in oakville, it 613sqft plus 107sqft balcony ... it a 10 years old building, bought it for 285k and it now selling in my building around 370-380k
35 replies
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Aug 18, 2005
16896 posts
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GTA West
Stupid? No. Risky? Yes.
You're putting a lot of money down.
You don't really know when you'll get your return on investment. And in the fine print of the paperwork, they can pretty much change anything. So you don't even know what you are getting.
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[OP]
Member
Jan 15, 2013
236 posts
9 upvotes
Oakville
Jucius Maximus wrote:
Aug 12th, 2017 5:05 pm
Stupid? No. Risky? Yes.
You're putting a lot of money down.
You don't really know when you'll get your return on investment. And in the fine print of the paperwork, they can pretty much change anything. So you don't even know what you are getting.
I'm checking out this condo development called Oak & Co condos in oakville. A platinum agent told me the possible price rate range is $625-650/sqft but told me that it could be lower. I will find out the true price around the end of the month

My end game is to get a house but it out of reach for me so I thought I would get the pre con and sell later to make a profit to build more equity to put a major downpayment on the house
Deal Addict
Feb 22, 2011
1667 posts
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Toronto
I think this is a bad idea. You already own so just stay there, save up and when you have enough with your cash and equity then upgrade. Real estate transactions are very expensive and shouldn't be done lightly.
[OP]
Member
Jan 15, 2013
236 posts
9 upvotes
Oakville
rjg4235 wrote:
Aug 12th, 2017 5:33 pm
I think this is a bad idea. You already own so just stay there, save up and when you have enough with your cash and equity then upgrade. Real estate transactions are very expensive and shouldn't be done lightly.
Lol oh boy ... making me doubt about the pre con lol... my condo is on the 3rd floor, one of reasons is to get the view but in guess in hindsight it not a big deal because I won't be living there forever

My condo is rented out right now ... 2 years now and I'm planning to give notice to my tenant and move in this spring

Currently have 60k now and probably 75k saved up by the time I move in.
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Feb 22, 2011
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Toronto
toshibaaa wrote:
Aug 12th, 2017 6:33 pm
Lol oh boy ... making me doubt about the pre con lol... my condo is on the 3rd floor, one of reasons is to get the view but in guess in hindsight it not a big deal because I won't be living there forever

My condo is rented out right now ... 2 years now and I'm planning to give notice to my tenant and move in this spring

Currently have 60k now and probably 75k saved up by the time I move in.
If it's cash flow positive then it may be worth considering keeping as an investment. I had a condo townhouse I was living in and rented it out to save up. My fiance bought a condo so we moved in there. We then rented that out to save up again and bought a house. It worked out really well. Was a sacrifice for a few years but definitely worth it. She is in her mid twenties and could probably retire if she really wanted. We don't really need the income now.
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Aug 10, 2017
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Listen to RJG4235 and construct a cash flow statement and see how much out of pocket you'll be if you decide to rent it out.
I bought a pre-construction condo in Burlington
Was about 2 years late
Supposed to be hardwood floors and its laminate.
Quality of the build is shotty
Maintenance fee was supposed to be $375 and it was $575 at day 1 and now its $650
had a $2500 special assessment because the condo board was in the negatives after the first year. Usually the builder is supposed to compensate for this but they claimed bankruptcy and another builder bought them out.
It'll definitely not be as nice as you thought it would be. Lots of units these days have such dysfunctional floor plans.
Those marilyn monroe towers in Mississauga are a joke. They are round. Try mounting a tv over 40" in most of those units.
[OP]
Member
Jan 15, 2013
236 posts
9 upvotes
Oakville
rjg4235 wrote:
Aug 12th, 2017 6:50 pm
If it's cash flow positive then it may be worth considering keeping as an investment. I had a condo townhouse I was living in and rented it out to save up. My fiance bought a condo so we moved in there. We then rented that out to save up again and bought a house. It worked out really well. Was a sacrifice for a few years but definitely worth it. She is in her mid twenties and could probably retire if she really wanted. We don't really need the income now.
It like $50 positive and noticed the rental rate is alot higher like $250 but I need a place to live when my mother move to waterdown from oakville next year.

If I do the pre con .. I need to pull out pretty much all the money from the down payment on the old condo as the down payment for the new condo which means mortgage will increase which I don't think the bank will approve that
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Feb 22, 2011
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Toronto
toshibaaa wrote:
Aug 12th, 2017 7:09 pm
It like $50 positive and noticed the rental rate is alot higher like $250 but I need a place to live when my mother move to waterdown from oakville next year.

If I do the pre con .. I need to pull out pretty much all the money from the down payment on the old condo as the down payment for the new condo which means mortgage will increase which I don't think the bank will approve that
That and you have to wait for it to be done, it might not look as planned and maint fees could be hire. I almost bought one 5 years ago because it looked really nice and the final product was hideous.

It can be hit or miss but if I were you I'd look at buying a 1 bedroom resale for myself to live in.

As it stands you have an asset increasing your networth every month without having to do anything. Plus when this tenant leaves you would likely be up $300/m in cashflow.
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Aug 10, 2017
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toshibaaa wrote:
Aug 12th, 2017 7:09 pm
It like $50 positive and noticed the rental rate is alot higher like $250 but I need a place to live when my mother move to waterdown from oakville next year.

If I do the pre con .. I need to pull out pretty much all the money from the down payment on the old condo as the down payment for the new condo which means mortgage will increase which I don't think the bank will approve that
Can i see your cash flow statement? I can't see it being $50 positive each month.
You'll probably be in the positive when working your yearly yield on your statement of rentals tax form but I really can't see a cash flow positive condo rental in oakville happening.
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Feb 22, 2011
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Toronto
cdndeal wrote:
Aug 12th, 2017 7:19 pm
Can i see your cash flow statement? I can't see it being $50 positive each month.
You'll probably be in the positive when working your yearly yield on your statement of rentals tax form but I really can't see a cash flow positive condo rental in oakville happening.
How could you possibly expect to know whether or not it's cash flow positive when you have no idea how much he put down?
Sr. Member
Feb 9, 2013
907 posts
148 upvotes
Mississauga
rjg4235 wrote:
Aug 12th, 2017 6:50 pm
If it's cash flow positive then it may be worth considering keeping as an investment. I had a condo townhouse I was living in and rented it out to save up. My fiance bought a condo so we moved in there. We then rented that out to save up again and bought a house. It worked out really well. Was a sacrifice for a few years but definitely worth it. She is in her mid twenties and could probably retire if she really wanted. We don't really need the income now.
Where did you live when you "rented it out to save up"?
Impressive she can retire early in mid-20s with just a condo as investment
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Aug 10, 2017
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rjg4235 wrote:
Aug 12th, 2017 7:26 pm
How could you possibly expect to know whether or not it's cash flow positive when you have no idea how much he put down?
Because I know better and to put 20% down if it's an investment property and use the banks money and only to put more down if the banks make you (usually when having 5+ rentals)
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Feb 22, 2011
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Toronto
jdu0ng wrote:
Aug 12th, 2017 7:38 pm
Where did you live when you "rented it out to save up"?
Impressive she can retire early in mid-20s with just a condo as investment
Well obviously I would still work, my point was my income would be enough now with the two investment properties. I wasn't trying to imply she could just retire with a condo. When I moved out of my townhouse I rented out a room in a basement. When we moved out together we stayed at her parents but still paid $500 for a room to be fair.
Jr. Member
Feb 16, 2017
184 posts
35 upvotes
everything is fair in real estate you already see a 100k profit in your previous investment so its working out well for you .. just go with your guts and keep investing Good Luck

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