If the whole condo investment process is done properly, it will have amazing financial returns. Therefore, it is better to start this process with full knowledge of all the steps to avoid possible mistakes and take good advantage of this great opportunity for return on investment. Here are some important mistakes to avoid when investing in a condo in Toronto.
Mistakes to Avoid for Condo Investment
You should know your goals before buying
You will be amazed at how much first-time investors are initially unaware of their own investment goals. Before making such an investment, you need to clarify the answers to these questions for yourself: What is the minimum acceptable return on cash investment? How long do you plan to keep the property? If it is not a pre-construction condo investment, can you afford the condo renovation costs? And can you manage and oversee the whole condo investment process?
You should not ignore the hidden costs
One of the most common mistakes that first-time investors make is to think that the total cost is just the purchase price. Before you buy a condo, you should be completely aware of how much it costs to buy a condo. Expected costs include land transfer tax, levies and development charges, legal fees and real estate agent commission, utility hook-up fees (for pre-construction condos), and harmonized sales tax (in some cases).
Levies and development charges are usually variable in a resale condo rather than a pre-construction. However, a professional Toronto realtor can help you eliminate or limit some of it.
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Don’t skip the legal advice
Skipping the legal advice can be one of the biggest mistakes of the first condo investor. You may be seduced or be afraid of losing the opportunity of buying a beautiful condo and decide to sign the contract right away without receiving any legal advice. If you do that precipitously, you could end up stuck with a bunch of substitutions, exclusions or inclusions that could depreciate your condo’s future value. So it would certainly be more reasonable to pay $ 800-1600 to get reliable legal advice to avoid unexpected costs in the future. A trustworthy real estate lawyer can give you all the information about purchase agreement and warning signs to consider.
Don’t accept any delay
Since the 2006 Tarion decision, now you can legally be compensated and awarded damages if your move-in date has had a considerable delay. You also have a legal right to choose proceeding without compensation or get out of the deal entirely.
Currently, critical dates are part of the purchase agreement and contract. If a builder fails to provide these critical dates and requires an extension, you as a buyer can either agree or seek compensation, you can also simply get out of the deal. It is recommended to receive legal advice if you’re presented with a request to delay a critical date.
Don’t trust the floor plan
Determining the square footage of a resale condo is easy, but it will be a bit more complicated for pre-construction condos. You may see a condo be advertised as 700 sq. ft., but then it turns out that 700 square feet includes a balcony and hallway, and its actual space is only 560 sq. ft.
The important thing when buying a condo is that the resale condos cannot be listed including the hallways, bathrooms or balcony space as part of the total area, but in the case of pre-construction condos, the terms are quite different. The safest way to avoid this mistake is to receive the details of room sizes and plan in writing. If you encountered any substantial difference between the written details and the completed condo, you can negotiate for the price reduction or try to get out of the deal.
Don’t Overlook the Location’s Long-Term Potential
While it’s tempting to focus solely on the condo’s amenities and immediate surroundings, many investors make the mistake of ignoring the long-term development plans for the area. A neighborhood that seems quiet or underdeveloped today may be slated for major infrastructure improvements, new businesses, or transit expansions in the coming years. Conversely, some areas may face challenges such as overcrowding or loss of green spaces. Before making a purchase, it’s crucial to research the city’s future plans for the area, talk to local experts, and assess the potential for growth or decline. Overlooking this factor could impact your property’s value and rental demand in the long run.