Guide For Investing in Preconstruction
Many first time buyers and investors are unaware of the process of purchasing pre construction. Below is a comprehensive step by step guide to investing in pre construction.
An agent is the most informed of what opportunities are available. Developers do not always publish their initial incentives to the public and may begin the sales process before launching a marketing campaign. Your agent can often get access to pre sale incentives and will be the most knowledgeable of how to find these opportunities.
1. Consultation with an agent
A common misconception is you require a mortgage as soon as you secure a unit. In reality you do not always require a mortgage on signing and are not required to pay down the principal unit you close.
2. Understanding your financial abilities
Your agent will help you determine the right development. It is their job to form a relationship with the developer. They will communicate all incentives and building specifications.
3. Determining the right development
4. Choosing the right unit
Your agent will then present the available floor plans. Often in the early stages of sales you are asked to submit your top two or three floor plans on a worksheet and you will be offered a unit based off availability.
At this time you are usually asked to place an initial deposit to secure your unit, often this is around $5000.
5. Deposit Structure
After confirming your unit choice the deposit schedule begins. Generally, the deposit is paid in instalments over a 12 to 18 month period.
After this is complete you wait for project to be completed. This can be a two to three year process depending how early you secure your unit.
6. Pre Occupancy
Once the building is nearing completion developers often let buyers move in pre occupancy.
When you are granted pre occupancy is often determined by where your unit is located in the building, this could be anywhere between 1-6 months.
When the building is nearing completion you will be required to secure your funds or financing and close on your unit. Once your mortgage is finalized you are able to close.