1. Know the Developer

When looking at pre-construction, you are essentially purchasing something that hasn't been built yet. That's why you need to do your due diligence and research the developer. There are always risks to consider when buying pre-construction. However, those risks can be mitigated when you choose to buy from a reputable developer, one who has a great track record. How long has the developer been in business?

What were their past projects?
Do they have a good reputation?
What is the quality of their work?

2. Location, Location, Location

It's a common saying in real estate, that it’s all about location. Looking at the real estate market, this is especially true. When purchasing a pre-construction home that may not be completed for 3 to 5 years, your ability to see into the future becomes even more magnified.

Is the area gentrifying?
What are the local schools like ?
Will there be transit or any large infrastructure projects?

What is the access to parks, coffee shops, and restaurants like?

3. Be Sure of the Floor Plan

It's paramount that you choose a good floor plan. Your choice of floor plan can be a make or break decision for your investment or future home. Especially as a pre-construction buyer, purchasing from a floor plan can be difficult. So, think about some of these considerations:

The best homes are the ones that have the most natural light.

Wide, open concept floor plans are better then long
and narrow ones, which often tend to be darker.
Are the ceilings stipple or smooth?
Is there a kitchen island or option to have one available?

Does it have main floor laundry?
Envision what this will look like from an investment perspective, whether that's for the eventual tenant or buyer, or as a future home.

4. The Deposit

When acquiring a pre-construction property, the deposit is usually spread out over time. Deposit structure can vary and unlike price with many builders the deposit structure can be pushed out, which can be helpful to an investor looking to preserve cash flow or to a first-time home buyer on a budget.

5. Hire a Real Estate Lawyer

A new home Purchase and Sale Agreement is a very thick document. Besides this, signing on for a new home can be quite intimidating. While fairly standard, these agreements are written by lawyers and can be somewhat one-sided to favour the developer. It cannot be stressed enough, how important it is to have a real estate lawyer, one that specializes in this line of work to review the documents for you during the conditional period. Furthermore, They will be able to walk you through the document and outline your commitments and closing costs.

6. Factor in Closing Costs

There are a lot of costs to consider as a pre-construction buyer. Specifically, these are costs that are due on close and which are not on the developer's price list or disclosed in their marketing material. It's imperative that you have a qualified lawyer review all these costs so that you can properly evaluate the opportunity. What's more is that you're not taken off guard when the property closes 3 to 5 years from now.

Development charges
Land transfer taxes
Utility connection fees
Education levies
Park levies
The list goes on...

7. Understand the Assignment Clause, If Any

The right to assign means that you, as the purchaser, have the right to sell your contract to another buyer prior to occupancy. This is beneficial to have as part of your agreement. It gives you the option to sell the property so that you're not locked in until close. However, make sure to read the agreement fine print for any limits to your ability to assign the property. This condition is important, even if you are intending to live in the condo since many things can change over a period of 3 to 5 years.

8. The HST Rebate

The HST rebate is not always clearly explained at the time of purchase. So, it's important to understand that HST (unlike resale) is applicable to all new home purchases. As a pre-construction buyer, if you are an end-user (meaning, you are going to live in the condo), the developer will pay HST and will, in turn, have the right to apply for the rebate. If you are deemed to be an investor, you will have to pay the HST owing and have the right on your own behalf to apply for the rebate. You should speak to your lawyer prior to purchasing or before going firm, so that you are clear on how this could financially impact you on closing.