How to weigh the risks and reap the rewards of this real estate investment
Vancouver’s housing market moves fast — blink, and you might miss it. Sometimes, the only way to get in on the ground floor is to literally get in on the ground floor.
In this case, we’re referring to presale or pre-build condominiums.
For traditionalists, presale condos are a daunting prospect. The thought of investing six figures into a floor plan and going all in, sight unseen, on what’s ultimately still a concept can be hard to wrap your head around. But the market has changed, and with the right expectations and research, buying a presale condo isn’t just a tangible entry-point into ownership for first-time buyers: it’s a cost-effective way to plan for your future and get in early on a great investment.
Still, there are some key considerations to take into account if you’re thinking about buying a presale condo in Vancouver, from how to deal with delays to finding the right insurance with a provider like BCAA.
Here’s what you need to know.
Do a little digging (before the actual digging starts)
It’s sad to say, but condo scams do exist. So, whether you find your future condo online or by walking past its sales office, your first step should be to do a little sleuthing.
Look into the developer: what were their previous projects, do they have a history of delays and, most importantly, are they legitimate? Vancouver is a major city, but it’s smaller than you think. Asking around goes a long way.
Comb over the details
Purchasing a presale condo isn’t as easy as putting down a deposit and waiting patiently. There’s going to be paperwork — probably a lot of it — so don’t skim over the fine print.
Be sure to gather information on how much parking costs and whether your unit comes with a storage locker. You should also ask about maintenance fees and which amenities, utilities and services your money will be put towards. These won’t be hidden costs if you plan ahead.
Protect yourself
While the strata or management company may have your best interest at heart, their policy only covers the building and common areas. Simply put, you’re going to need a personal policy to protect you, your personal belongings and much more.
BCAA’s Condo Insurance plans don’t just protect your possessions in the ways you’d expect — from crime, vandalism, fire and water damage; they also offer additional protection against things that the building’s insurance doesn’t. For instance, if water leakage from one unit causes damage to those beneath it (including yours), your strata may not cover the full costs of restoring your unit, especially if you’ve invested in expensive upgrades. This is where BCAA’s condo insurance comes in. Plus, if you’re a member, you save an additional 10% on all insurance plans.
Pay it forward, slowly, but plan ahead
It’s obvious, but it bears repeating: when it comes to buying a presale condo, patience is a virtue. And when it comes to your bank account, we recommend taking full advantage of the extra time. Typically, presale condo developments let you pay your down payment incrementally, letting you put down a deposit (between 5 and 20%) and chip away at the full amount until the condo’s closing date.
Of course, that doesn’t mean you should have a laissez-faire approach when it comes to your condo’s finances. This isn’t the time to set it and forget it. You’re going to need a contingency plan to account for any extra expenses that might arise during construction and remember that you will have to settle up any condo closing fees before your move-in date.
Be prepared for delays
You’ll be given a timeline when you first start negotiating the purchase, but be aware that condo developments tend to run a little behind — some by a few months, others by more than a year. Delays can be the result of anything from issues with zoning and permits to funding and material concerns. Sometimes something as common as bad weather is enough to set construction back by weeks.
That being said, don’t panic (at least not initially). While not ideal, delays are par for the course when it comes to condo developments.
If, however, major delays become a common occurrence and you feel yourself getting anxious, stay on top if the situation. Keep in constant contact with your realtor and hold yourself, and the developers, accountable.
Being prepared when purchasing a presale condo doesn’t only have to be about paperwork and worst-case scenarios. Don’t think of your caution as protection from the worst — think of it as security for the future. The legwork that you put in today will reap rewards when you’re settling into your new home feeling secure and confident in your investment.
