Back to Blog
Buying & Selling Tips

5 Reasons Why Presale Properties are Becoming Even More Attractive

By Justin Kerby Apr 23, 2021

From first-time homebuyers to investors and downsizers, presale properties are becoming an extremely attractive opportunity in today’s real estate market. Pre-construction properties have yet to be built, so the process and experience of buying are entirely different from that of a standard re-sale transaction. Buying a presale property means that you are buying the rights to a future home, which comes with several significant benefits.

Before we get into the benefits, let’s define presale or pre-construction properties further.

 

What is a Presale?

New condo developments draw significant interest from Canadians when they’re announced. A presale is when a developer brings suites in a particular development to market before construction has begun. This allows buyers to own the rights to a future home in exchange for placing a deposit down on the property. It’s typical to see buyers put down anywhere from 5% to 10% on the purchase price, which goes into a trust account until the development is completed.

Here’s a look at why presale properties are becoming even more attractive to buyers.

 

1. Flexibility

Presale properties can take up to four years to be built, giving buyers a large timeframe to fix up and sell their existing residence, save money for a down payment, and have a slow and comfortable move. It’s not uncommon for individuals who anticipate an uptick in the market over the coming years to invest in a presale property, especially for those who are close but not quite ready to list their home.

This strategy has become very popular during the pandemic, as many homeowners are choosing to wait and sell in a few years while still wanting to lock in today’s prices. There’s a large segment of current homeowners looking to downsize in the near future, and buying a pre-construction property gives them the time they need to get ready to sell without a huge upfront price tag.

Buying a presale property also gives you flexibility in terms of the customizations that come with your unit. You’ll be able to choose from a variety of styles and layouts, and upgrade your finishes so that everything looks just the way you’d like it to when you move into your new home. New developments also often come with attractive amenities like gyms, pools, and rooftop patios, so explore the options that come with your investment. There’s likely a development already being planned with the amenities you need to be comfortable.

 

2. Investment Opportunities

Leverage can be one of the major benefits of purchasing a presale property. Buyers can typically secure a purchase with as little as a 5% or 10% deposit, leaving them with an opportunity to see significant returns should the property increase in value. Locking in a price on your purchase date has proven extremely profitable for many Canadian buyers over the last decade. When the market goes up, investors can realize market gains without the costs of regular mortgage payments, maintenance fees, and property taxes.

An additional reason that presale properties can make great investments is the developer’s commitment to the areas where they build. New developments can truly transform neighbourhoods in a matter of years, with commercial space for new businesses often accompanying new projects. It can be very profitable to get in early if you spot a transformation taking place, especially if other developments are going up in the area.

 

3. Less Hassle

Brand new buildings simply have fewer problems than older buildings and their units. Buying a presale from a reputable developer like Allure Ventures, Miracon, or Westbank, to name a few, typically won’t require any repairs for a significant time period upon the completion of the project. This gives you years to enjoy your home without the stresses of constant repairs that often come with re-sale properties. There’s no worrying about a leaky condo, pipes bursting, or roof replacement when you move into your new property. It’s likely to be many years before any significant maintenance or replacement costs are associated with your home.

 

4. More Protection

Presale construction generally comes with a warranty, which is another benefit to purchasing a presale property. In British Columbia, for example, 2-5-10 year home warranty insurance is included on all presale construction. This warranty means that potential costs are limited for an extended period of time:

-2 years on any labour and/or materials (electrical, plumbing, heating ventilation, air conditioning etc.)

-5 years on the building exterior

-10 years on the structure of the home

A 2-5-10 year home warranty protects you from any unforeseen circumstances and ensures that you’ll be made whole on any potential issues with the property upon its completion. There are also typically 15-months covered for any labour and materials associated with common property.

 

5. More Options

Things can change over a few years, and presale properties give their owners many options when it comes to ownership. You can choose to sell your assignment prior to moving in, find tenants and rent out your property upon completion, or wait for the development to be built and move into your new home.

Finding tenants for a new property isn’t a challenging task in most markets, as new units are typically in high demand from renters. They have better amenities than older properties, better layouts, less maintenance, and of course, come in a brand new state which is incredibly appealing. It’s easy to understand why they’re in higher demand from renters than older options. Besides being more desired by renters, they’ll also permit you to rent out your property for more monthly rent than a comparable older property. More demand means higher rent prices and a better return on your investment.

Buying a presale property has become an attractive option in today’s market. Compared to purchasing a re-sale property, the 5% to 10% deposit needed to secure a property can be very attractive. Research the site’s surroundings in detail and ensure that you think that a development will help transform the community. Sometimes the waiting period can feel long, but time is often just what a neighbourhood needs to develop into a thriving community and what your investment needs to mature.

Justin Kerby
Justin Kerby is the founder of Something Great, a digital marketing agency that specializes in real estate branding and content creation. They help companies create social media strategies, newsletters, blog content plans, and advertising campaigns.
Never Miss a Story
Subscribe to our newsletter and get the week's top real estate news delivered to your inbox.
You can unsubscribe at any time