Are you considering purchasing a pre-construction home in the GTA? While buying a pre-construction home is very appealing for many reasons, there are also some things you need to consider before locking into an agreement. That’s why our experts at Soni Chachad Real Estate have compiled a list of 5 pros and cons of buying a pre-construction home, along with a bonus look at a few pre-construction properties we have available for you today!

PROS 

1. Customization Options

Arguably one of the best parts of buying a pre-construction house is there will typically be customization options available to make your home unique to you. Although some builders will follow a standard plan, buyers can usually customize at least a few things inside the home. Some examples of customizable options include paint colours, flooring, countertops, and tiles. When it comes to customization, it’s important to know who you’re working with – does your builder specialize in custom homes, or do they follow a standard construction procedure?

2. Time to Save for a Down Payment

Another thing that many buyers find advantageous is they have time to save for a down payment. With pre-construction, you’re paying the down payment over the course of the construction, typically in 5% payments rather than in one lump sum. Most projects will require a down payment of 20%, but the benefit is that the deposit structure will be spread out over 3-4 years, making it attractive to buyers who may not have the full down payment amount upfront.

3. Buying Early Means Appreciation Potential

Something else to consider is that buying early means there is the potential for appreciation over time. Although there is no guarantee, if house prices rise between the time you sign the sales agreement and the time your home is complete, you could be moving into a home with a significantly higher market value than the price you paid.

4. No Bidding Wars

If you’ve ever purchased a resale home in a hot market, you know the stress a bidding war can put on a transaction. Thankfully, with pre-construction homes, there are no bidding wars – you know the price ahead of time, and there is either a unit available for you or not. This is a welcome relief for many who are tired of fighting other buyers to purchase a home, resulting in a much calmer buying experience.

5. Low Maintenance Fees (to Start) & Warranty

Finally, when moving into a pre-construction home, everything should be in tip-top shape, meaning you’ll enjoy low maintenance fees (to start) and a warranty. If anything happens to your new house, which the likelihood is low but not zero, it should be covered under warranty; however, you do need to be aware that your maintenance fees will likely rise over time. For example, most condo projects in the GTA have seen maintenance fees increase by about 10-30% over a period of 2-3 years.

CONS 

1. Higher Down Payment Than Resale

As you may have realized by reading the ‘pros,’ pre-construction homes require a higher down payment amount than resale homes. Yes, it’s spread out over time, but it’s still typically 20%, whereas resale homes can have down payments as low as 5% (as long as the purchase price is under $1M). With pre-construction homes, the down payment amount is set by the developer and isn’t always going to be accessible for buyers, especially first-time home buyers.

2. Potential Delays

When you purchase a pre-construction home, you must be prepared to face potential delays. Although no one wants to wait extra time to get into their dream home, the builder cannot sign off on the home and allow you to move in until it’s finished. If they run into any issues with things like permits or hookups, you could be forced to wait past the original completion date.

3. Paying HST

One thing that buyers often don’t realize is that with pre-construction homes in the GTA, you will be paying HST on top of the regular GST. There is already a GST/HST rebate included in the purchase price of a home when you buy directly from a builder, so you need to be mindful to factor that in financially when saving for a pre-construction home.

4. Imbalanced Risk

Though there is risk in any investment, it’s important to note that there is an imbalanced risk between you and the developer in pre-construction. While you risk forfeiting your deposit should you not be able to cover the mortgage at closing (as well as potentially facing further legal action from the developer for damages), if the developer fails to complete the project for whatever reason, they simply return your deposit, and that’s it. Thankfully, many GTA developers are backed by major banks and lenders, but this is still an important aspect to consider when purchasing a pre-construction home.

5. Interest Rates & Financing

A final ‘con’ you need to be aware of is that nobody can (100% accurately) predict where interest rates will be in 2-3 years from now. While your pre-approval may be valid today, if rates go up, you lose your job, or the property market value decreases drastically, you could be facing a larger down payment – or worse, a pre-approval that’s no longer valid. So, how do you avoid this? Do your best to prepare financially and ensure your budget can handle a rise in interest rates.

Bonus: Pre-Construction Homes from Soni Chachad Real Estate

Did you know that Soni Chachad Real Estate has several pre-construction homes that are currently available?! Here’s a brief look at them!

The Red Hill Semis 

?? 29 Dana Drive, Hamilton

?? 769 Knox Avenue, Hamilton

Starting at $849,900, these 1424 square-foot semi-detached properties will be ready for closing in early 2025. Here are some unit features you need to know about!

?? 3 Bedroom

?? 2 Bathroom

?? Single Garage

?? Master with Ensuite

?? Unfinished Basement

?? Specialty Add-Ons Available

Bedroom 1 (Master) – 16’x11’

Bedroom 2 – 7’11”x16’

Bedroom 3 – 7’9”x13’

*Flexible closing and deposit options available*

The Macassa Towns 

?? 420 Red Oak Avenue, Stoney Creek

Starting at $889,900, these townhouses range in size from 1544 square feet to 1607 square feet (depending on if you opt for an interior or exterior unit) and will be ready for closing in mid-2025. Here are some unit features you need to know about!

?? 3 Bedroom

?? 2.5 Bathroom

?? Single Garage

?? Master with Ensuite

?? Upper-Level Laundry

?? Middle Unit with Sun Tunnel

Bedroom 1 – 9’3”x11’

Bedroom 2 – 9’3”x11’

Bedroom 3 (Master) – 10’5”x12’

*Flexible closing and deposit options available*

Bringing it All Together 

If you decide pre-construction is best for you, it’s important to consider all the pros and cons to make an informed decision. Although you will likely have customizable options available to you with a pre-construction home, you need to be ready to potentially face unexpected delays that could set your move-in date back. On the one hand, you’ll have more time to save for your down payment, while on the other, it will be much more than what’s normally required for a resale home. With a pre-construction home, you don’t have to worry about bidding wars, but you do have to worry about HST. And that’s not to mention the imbalanced risk between you as the buyer and the developer. While you will enjoy low maintenance fees and warranty since you’re moving into a new home, you need to be prepared for the maintenance fees to increase over time. And finally, you must also consider that the market can change rapidly over the course of construction, and you need to take steps to ensure your financing will still work even throughout market fluctuations. Ultimately, depending on your situation, buying a pre-construction home could be a great option – you get a brand-new home in a prime location for a locked-in price – but it’s always important to consider both sides of the coin when it comes to your next real estate transaction.

If you’d like further information about our available pre-construction homes or if you’re searching for an experienced, reputable realtor in the GTA to represent you as a buyer or seller in your next home transaction, be sure to check out my featured listings and do not hesitate to reach out to me directly!  

In an effort to tame inflation, the Bank of Canada (BoC) has increased its key policy rate ten times since March 2022, bringing it to a 22-year high of 5%. The increases have squeezed the once-hot Canadian housing market, with many buyers hoping to wait it out; however, we’re here to show you why it still might be a good time to buy. Although it may seem counterintuitive, there are actually several positives to think about regarding homeownership when interest rates are this high. So today, our experts at Soni Chachad Real Estate have compiled a list of 5 benefits of buying when rates are high, and we will be exploring a perspective you may not have considered from a licensed realtor.

1. Less Competition

For starters, rising interest rates can mean less competition within the real estate market. You might be wondering, “How is this possible?” Well, when interest rates are low, consumer borrowing power increases, and more buyers flood the market, driving up demand, prices, and competition (like we saw in the first few years of the pandemic). But, when interest rates are higher (like they are today), consumer purchasing power decreases, and fewer people are eligible for mortgages, meaning there’s less competition for the homes on the market. Therefore, as long as you can secure a mortgage, you can enjoy shopping around without worrying that a home will skyrocket in price due to buyer demand. Unfortunately, the flip side is that rising interest rates make houses more expensive for buyers. So then, how do you still ensure you get the home you want within your price range?

2. Potential Downward Pressure on Sales Prices

With the BoC’s rate hikes rolling around in the back of your mind, you’re probably concerned about finding the home you want for a price you can afford. And while it’s true that higher rates equal higher payments, there’s also something else to consider: when fewer people can afford to buy in certain areas, it means that sellers will be forced to become more flexible with their pricing. Not only that, but you won’t have to stress about a home getting multiple offers above its asking price, which was a trend for the last few years before the BoC started increasing its rates in early 2022. This potential downward pressure on sales prices means you gain some negotiating power as the buyer and can (hopefully) get the home you’re dreaming of while sticking within your budget.

3. Reduced Buyer Risk

A third benefit that you may have yet to consider is that with higher interest rates comes reduced buyer risk. With extremely high buyer competition during the 2020-2022 period, many buyers were waiving offer contingencies in hopes of securing a better chance of being chosen by the seller. The problem is that waiving these contingencies also waives two important things: the inspection and the appraisal. When you waive the inspection and the appraisal, your buyer risk shoots way up because you’re missing out on key pieces of information that can make or break a sale. However, with the market evening out (thanks to these rate hikes), we’re seeing these inspection and appraisal contingencies re-emerging, thereby reducing your risk as a buyer.

4. Use Inflation to Your Advantage

One thing that people often forget is that real estate can hold its own against inflation through appreciation. As a recent article in Forbes points out, while inflation punishes those who wait, it rewards those who invest in appreciating assets like real estate. And this is what many people who purchased homes between 2020 and 2022 are experiencing right now, particularly those who are locked into a fixed-rate mortgage. But that’s not the only way to use inflation to your advantage in today’s market. Consider this, as the value of the dollar declines, so does the value of debt, meaning inflation can potentially make owning a home and paying a mortgage more affordable for some people than paying rent. Especially when you consider the fact that many real estate investors and landlords are capitalizing on inflation and this increased demand by charging higher rent while retaining lower mortgage rates. So, if you were considering transforming your basement into a rental suite, now might be an ideal time!

5. Refinancing Options

Finally, (and potentially the most important thing to consider when purchasing in today’s market), buying a home at a lower price but at a higher interest rate can be workable if you can refinance the mortgage in the future to reduce your rate. Although taking out a mortgage may initially seem like a set-in-stone thirty-year commitment, interest rates are temporary and refinancing options are available. Of course, there are no guarantees about what the future holds, but you may consider refinancing your home once mortgage rates drop (which the BoC is predicted to start doing in early 2024). By doing this, you’ll not only have received the benefit of buying at today’s lower prices but then you’ll be able to reduce your mortgage payments by refinancing to a lower rate in the future. 

Final Thoughts 

Ultimately, although it may seem illogical at first, there are several benefits to buying a home in today’s housing market. Yes, rates are higher than we’ve previously seen. Yes, that means you’ll have a tougher time securing a mortgage. And yes, that means your payments will be higher – for now. However, by taking advantage of the current real estate landscape, you can enjoy less competition, potential downward pressure on sales prices, and reduced buyer risk. Not to mention, you can learn how to use inflation to your advantage and opt for refinancing options in the future. So, no matter what you decide, we hope this article gave you a new perspective on why now is a good time to consider jumping into homeownership.

If you’d like further information or if you’re searching for an experienced, reputable realtor in the GTA to represent you as a buyer or seller in your next home transaction, be sure to check out my featured listings and do not hesitate to reach out to me directly!  

So, it’s time to break free from the rental market as you look to purchase your very first home – how exciting! But what exactly do you need to know about the home buying process? Well, there are many things to consider (especially if you’ve never done it before!), which is why our experts at Soni Chachad Real Estate have compiled 7 tips for first-time home buyers in the GTA to help your transition into homeownership go as smoothly as possible.

1. Be Proactive

The first thing you need to do if you’re looking to purchase a home is to be proactive with your finances. Anytime you buy a home, you need to put down between 3 to 20% of the total price as a down payment. As a result, we recommend that you start saving early and consistently over time to ensure you have enough to cover this cost. Another way you need to be proactive is to start working on your credit score as soon as possible. Almost everyone has room for improvement when it comes to their credit score, so before you reach out to a lender, we recommend reviewing your credit report to see where you stand.

2. Consider Your Needs and Set a Budget

Beyond proactively getting your finances together, you also need to take some time to consider your needs and set a budget. Ask yourself questions like, ‘What type of neighbourhood would we like to live in?;’ ‘What are our non-negotiables for the house?;’ and ‘What are some areas we’re willing to compromise on?’ From there, you can decide how much home you can afford and set a budget. Remember to factor in other expenses, such as insurance, property taxes, utility payments, and maintenance costs.

3. Look into First-Time Home Buying Programs

Did you know that both Ontario and Canada have incentive programs for first-time home buyers? For example, (after applying), the Government of Canada will provide first-time home buyers who receive qualified annual incomes of $120,000 or less with 5 to 10% of the cost of their new home. Ontario, on the other hand, offers eligible first-time home buyers a refund of the provincial land transfer tax that’s part of the closing costs you’ll be required to pay. There are also additional tax relief benefits for first-time buyers who purchase a new or existing home in Toronto. So, even if you don’t live in the GTA, it’s always a good idea to look into the first-time home buying programs that are available to you to help you save some money on your first home!

4. Compare Mortgage Lenders

One of the most important parts of buying a home is securing a pre-approval. We know it’s tempting to go with the first lender that approves you; however, we always recommend that you compare mortgage lenders to find the best overall fit for your needs. Investigate the different types of mortgages, compare mortgage rates from at least three different types of lenders, and look at all the terms of the mortgage to decide if it’s a good time to move forward. Then, once you’ve settled on a lender, you can go ahead and get pre-approved for a mortgage.

5. Don’t Skip the Home Inspection

So, you’ve secured your pre-approval, and now it’s time for the fun part – house shopping! Once you’ve found your dream home and are ready to move forward, the most important advice we could give you (seriously, if you take nothing else away from this article, at least remember this): don’t skip the home inspection! A thorough home inspection conducted by a professional can reveal issues that are not so apparent on the surface (even if it’s a new build!). Although you, as the buyer, don’t necessarily have to attend the inspection, it could be useful to be there. You can ask questions in real-time and ensure the inspectors can get to every part of the house, such as the roof and crawl space. Just keep in mind that standard inspections don’t test for things like radon, mould, or pests.

6. Negotiate, Negotiate, Negotiate

Something that a lot of first-time home buyers are nervous about doing is negotiating with the seller. However, when you know what price you can afford and what you need in a home to be happy, it’s worth negotiating to get it. You may opt to hire a real estate agent, such as our experts at Soni Chachad Real Estate, to help negotiate strategically on your behalf. Remember that it will depend on the current housing market; for instance, in a hot market with low inventory and multiple offers per property, a lowball offer isn’t going to work. On the flip side, if it’s a buyer’s market, you may be able to save money while still getting what you want by negotiating with the seller.

7. Prepare for Additional Expenses

Finally, something that many first-time home buyers are not aware of is that they need to prepare for additional expenses. Beyond the inspection fee and closing costs, there will also be loan fees, appraisal fees, and home maintenance costs to consider. Not to mention property tax, home insurance, and maybe even HOA fees (if applicable). Plus, did you know that some newer neighbourhoods charge more taxes to cover building new schools for the community? With everything already piling up on your plate, you don’t want the added stress of forgetting about these additional expenses, which is why we recommend budgeting for them early on.

Final Thoughts

Buying your first home is a long but very exciting process. Start off on the right foot by proactively getting your finances together, identify your needs and set a proper budget, and be sure to look into first-time home buyer incentives. Don’t forget to compare different mortgage lenders, and please, don’t skip the home inspection. Remember that it’s okay to negotiate to get what you want and to always be prepared for additional expenses that might pop up. Ultimately, we hope these tips have given you some actionable pieces of advice that you can utilize in your next real estate transaction, and even if you’re not prepared to purchase a home just yet, these are all important things to consider when you are ready.

If you’re searching for an experienced, reputable realtor in the GTA to represent you as a buyer or seller in your next home transaction (whether you’re a first-time home buyer or not), be sure to check out my featured listings and do not hesitate to reach out to me directly!  

When people think about renting out part of their home or a secondary property to a tenant, most people are immediately intrigued by the idea of passive income. Although this can be a significant benefit of being a landlord, many fail to realize just how much work goes into being a landlord and keeping a property in working order for a tenant. From setting up the property to finding the right tenant, addressing any maintenance requests, and cultivating a positive landlord-tenant relationship, many things go into running a rental property that people might not think about beforehand. That’s why our experts at Soni Chachad Real Estate have compiled a list of 7 things to consider before becoming a landlord so that you can understand what you’re getting into when you decide to take on a rental property.

1. Finding the Right Property

The very first thing you’ll need to do if you’re thinking about setting up a rental unit is work on finding the right property. For some, this might be as simple as converting their basement into a suite with separate access, while for others, this might involve scouting out a new location to start their rental property journey. Either way, when it comes to creating a rental property, it’s all about location, location, location. Ask yourself: What amenities is the unit close to? Is the location centralized, or will your tenants need to be okay with commuting? How close are the nearest schools, parks, and community centers? And how far away am I if something breaks and I need to come to fix it? When you consider how the location will affect you and your prospective tenants, you can choose the right property that will be the best financial investment for your endeavour as a landlord.

2. Determining Market Rent

Now that you’ve decided on the location, it’s time to work on determining market rent. To do this, we recommend starting with market research to evaluate how much you can charge for rent. Look at comparable rentals in the area to see how much they charge, and remember to consider community amenities such as pools, dog parks, or playgrounds, as these will appeal to tenants and can positively impact your property value. Completing this research is critical when determining market rent because if you set it too high, you will drive tenants away, or if you put it too low, you might attract tenants but not cover your expenses. At the very least, the rent you charge your tenants should be able to cover your costs, if not have a little extra leftover each month to compensate for your efforts as a landlord.

3. Understanding Fair Housing Laws

So, you have the property lined up, and you know how much you’re going to charge, but what else do you need to be doing to get set up for success as a new landlord? Well, one thing many landlords overlook but is critical to ensuring a smooth rental experience is understanding fair housing laws. Different provinces have different rules regarding rentals, but these resources are easily found online, so you can be prepared for whatever might get thrown your way. For example, there are differing regulations from province to province regarding damage deposits and eviction, so it’s important to do your research to understand how these laws could affect your rental property.

4. Marketing Your Rental Effectively

Now that you’ve completed all this preliminary work, it’s finally time to get the word out about your new rental! This is where marketing your rental effectively becomes critical. Yes, you could put up flyers in the neighbourhood and attach a sign to the yard, but is that really the best way to reach your ideal tenants? You need to meet your tenants where they’re looking – online. When you list your unit online, prospective tenants can view photos of your property, review the description, and reach out to you directly to set up a tour. In other words, marketing your rental effectively online connects you to serious, qualified renters ready to move into your rental property.

5. Screening Potential Tenants

So, how do you ensure that you find a great tenant? This comes down to the process you have in place for screening potential tenants. Screening your tenants before handing over a key should be non-negotiable. Your prospective tenants need to be able to provide proof of steady income, a credit report, and references from previous landlords or employers. You might also consider using a reputable screening service to ensure your renter hasn’t fabricated this information. Once you have all of the information upfront, you can decide if you think this renter will be a good fit for your property.

6. Ensuring Proper Insurance Coverage

Something else to consider when setting up a rental property is ensuring you have proper insurance coverage. Typically, your existing home insurance policy should be enough coverage if you’re renting an apartment within your home. But, if you’re renting a building you don’t live in, you should look into landlord insurance. Although landlord policies can differ depending on your needs, they typically include coverage for the building, contents that you own on the property, liability arising from ownership of the property, and loss of rental income. However, one important thing to note is that your landlord insurance does not cover your tenants, meaning they would need to look into their own rental insurance to ensure coverage.

7. Hiring the Right Property Manager

Finally, if you want to take a more hands-off approach to your rental property but still want to ensure that everything is taken care of, it might be time to consider hiring the right property manager. Many of the things we’ve discussed in this article, including screening tenants, collecting rent, understanding rental regulations, and addressing ongoing maintenance, would become the property manager’s concern rather than yours. The trade-off is that you then pay a percentage of your rental income to the property management team; however, this means you don’t have to be on call for your tenants 24/7. Sounds nice, right? At Soni Chachad Real Estate, we want to help your dream of owning a rental property become a reality. Thanks to our comprehensive property management services, you can now enjoy the passive income from your rental property, knowing that the day-to-day operations are being handled by a team of experienced professionals.

Final Thoughts

As you can see, there are many factors to consider before deciding to become a landlord and investing in a rental property. If we’re being honest, setting up a rental unit can take a lot of time and effort, and even once your new tenant is settled in, you still need to be on standby constantly. That’s why we created our property management services – to give landlords back their time so they can enjoy the passive income from their rental property without getting caught up in the details. Instead, we handle your tenant requests, ongoing maintenance, rent collection, and anything else needed to keep things moving forward so you can focus on other things, like the next addition to your real estate portfolio.

If you’re a new or existing landlord looking for support with your rental property, contact our experienced team at Soni Chachad Real Estate. We’ll help you realize and streamline your dream of becoming a landlord today!