Things to Consider When Investing in a Condo
Introduction In most big cities, itâ€™s not unfamiliar to see condo developments dotting the skyline, whether under construction or already completed. Investing in a new condo may seem like an easy decision for a lot of people, but there are several important things to consider before you hand over your money.
Things to Consider When Investing in a Condo • • • • • • • •
The Developer The Price Location Logistics The Numbers Your Plan Common Mistakes Take Your Time
The Developer Whether the condo development is still under construction or it’s already up and ready to go, the developer should be one of the things you consider before investing. Not just anyone can put up a quality condo project that will stand the test of time. Keep in mind that it’s easy to get caught up in the hype surrounding a new condo development. Developers spend a lot of money on marketing, and if you don’t know what to look for you can get seduced by all the hype. Look for a developer that has experience and a portfolio of quality, successful projects, preferably in the area you are looking.
The Price The price is an obvious thing to consider when you want to invest in a condo. Just make sure you do your research so you know the price they are asking is fair for what youâ€™re getting. If the market is heated or that condo is in a trendy neighbourhood, you may have to pay an inflated price to get what you want.
Location If you want to invest in a condo that you plan to rent out or sell at a later date, itâ€™s important that the building is in a favorable location and neighbourhood. Take a look at the crime statistics, rental and resale stats and even the tourism statistics for that area. No area is going to be perfect, but it canâ€™t turn people away, either.
Logistics Development logistics such as the overall size of the project, the designer, layouts of the condos and the amenities are all important considerations. Look for a project that seems to have its feet on the ground and is going to create a community of condo owners rather than a spectacle.
The Numbers This comes back to what your plans are as an investor. If you’re looking for rental income, you have to run the numbers to make sure you’ll be bringing in the kind of income you want and when that may start happening. If the numbers don’t make sense, it won’t end up being much of an investment for you.
Your Plan If you’re going to invest in a condo and that investment is going to bring you a return, you must have a solid plan. You must know what you want to accomplish, who will manage your property, how much you have to pay capital gains taxes, as well as any other detail that surrounds the sale. Take the time to make a specific, detailed plan so you’ll know exactly where you stand and exactly when to take action.
Common Mistakes Some of the common mistakes that people make when they want to invest in a condo include: Misunderstanding the taxes and tax implications. Not checking to see if your view will be obstructed by new construction projects close by: • Assuming this property will appreciate. • Not reading industry reports or asking the right questions to developers and real estate agents. • Ignoring clear warning signs such as the developer having issues with the city, poor curb appeal, sluggish sales, prices that are too good to be true or negative publicity for whatever reason.
Take Your Time While there is always a time to take action and jump in, investing in any form of real estate can be risky and it usually pays to take your time. Surround yourself with people who have been there before and will help you make the right decisions. Create a timeline, but look at many different deals before taking the plunge. Don’t be afraid to use creativity when necessary and act on your instincts. If you don’t box yourself in with boundaries and rules, you’ll be the one who ends up on top more often than not. If you respect your capital and use patience, you’ll find a condo that will continue to pay you back for years to come.