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Pre-construction (or precon, presale condo, presale house) is referring to any housing project available to buy before the actual construction begins. This is a modern practice for real estate developer to leverage their resources and build financially viable projects.

You can buy pre-construction townhouses, semi-detached houses, and detached houses. However, the most available pre-construction product is high-rise condos in Canadian real estate market, especially in Great Toronto Area (GTA). pre-construction

Invest in pre-construction is a great way to advance your real estate investment to the next level:

  • Minimal Investment. Pre-construction usually requires a deposit between 10-15%, sometimes as low as 5%. Until the house is finished several years down the road, you don’t need to put any additional money in.

  • No burden of a mortgage. Unlike a traditional house purchasing which you need to pay a down payment first and then month-by-month mortgage payment, you don’t need to worry about the mortgage payment until the construction is actually finished. This is more leverage on your invested money.

  • No tenants. If you are really nervous about dealing with tenants, pre-construction is the way to go. Just pay the deposit and wait your investment to be constructed, no renting or tenant’s call whatsoever. However, if you decide to rent out the unit once it’s completed, there’s a whole new topic on rent out the unit.

  • Lock in tomorrow’s appreciation with today’s price. Given the long-term investment horizon, the pre-construction you purchased today can be sold at higher price 3 or 4 years later when they were built. This point can be challenged depending on the overall economic condition and market performance. But there is no denial that this is definitely one of the reasons most of investors buying pre-construction condos in Toronto.

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