There’s no denying it: some buyers are reluctant to consider pre-construction condos. They’ve heard stories about lengthy delays and “phantom rent,” so they’ve made the decision to stick with resale units. It’s unfortunate because when the process is managed well, the benefits of pre-construction condos are unmatched.
That said, if you’re considering buying pre-construction, there are a few things you should know. In this post, we’ll tackle some of the most frequently-asked questions buyers have about the pre-construction process—from occupancy periods and interim occupancy to official closing and how it impacts your purchase.
What’s the interim occupancy period?
So, you’ve been waiting patiently for your unit to be complete. Although all the bells and whistles of the building aren’t quite finished, you’ve been given the green light to move in! It’s not yet time for your mortgage to take effect, but your unit is complete and you can live in it. In official terms, you’re entering the Interim Occupancy phase of your purchase.
During this phase of the pre-construction process, you’ll be able to live in your unit while paying the developer a monthly fee. This can last anywhere from three to seven months – sometimes it’s less and sometimes it’s a bit more. It’s also completely unavoidable, so don’t feel like you’re being taken advantage of – everyone that purchases pre-construction condos will have to pay these fees.
This fee covers interest on your purchase price balance, estimated condo fees, and estimated property tax – all of which you would have to pay anyway.
Bought on a higher floor? While you’re going to enjoy breathtaking panoramic views, you’ll likely have to wait longer than those below you before getting into your unit. Another benefit – likely a shorter interim occupancy period, too.
Pre-Construction Condo Developers
As you’re researching info about pre-construction condos before you purchase, there are a lot of factors for you to consider – things like location, unit size, amenities, upgrades, and completion dates. But something else to think about is developer experience – you’ll want to know about the firm you’re working with. Is this their first building, or are they seasoned developers that have a good sense of timing? It’s like looking at a resume if you’re hiring – you want a candidate with the right experience and a reputable background.
Renting out your unit is something you’ll want to think about well in advance if you’re purchasing as an investment. You’ll want to ensure you can rent out your unit the moment you get the keys in your hands (during the interim occupancy period).
Since doing so can sometimes be a challenge for buyers, we always think about this at the time of purchase, and we like to work the rental-approval into the agreement of purchase and sale. With this pre-negotiated approval, you’ll be able to make rental income right away – something most won’t be able to do as they await approval from the developer.
Taking Ownership of Your Condo
Once a few months have passed and you’re well into your new routine of living in your new place, the time will come when you’ll have to officially close on your unit and take full ownership. This is the time when you’ll need to be mortgage-official and arrange things through your lawyer.
Once all of the i’s are dotted and t’s are crossed, it’s time to celebrate – your first pre-con purchase is complete and you are home-sweet-home.
If you’re looking for more details on the process of buying a pre-construction condo, simply fill out our form below – we would be happy to walk you through the entire experience, show you various developments our clients are buying at and help you strategize on how you can get into the pre-construction market sooner than you think.