Pre-construction condo purchases

[chibwack]

At this point in my life, I'm not prepared to buy a condo yet. I don't have a down payment saved up, I have a few student loans, etc. But, bar unforeseen circumstances, in 2-3 years I should have be in a position to get a nice ~350-400,000 condo at which point I've got two obvious options: new or preowned. Preowned is pretty straightforward, just look at the market when I'm ready. But whats involved in getting a quality unit in a new development? I figure those buildings probably take around 2 years to build, and they've gotta have some kind of cheaper pre-construction sale. So what would the process be there? The way I imagine it would be, find a building I think I'll like, sign up on a waiting list with maybe a 5-10k deposit, and then get pick of the units based on that list, not having to actually do the mortgage/down payment business for another couple years?

And while we're on that subject, where would I find a list of new developments that match my timeframe so I can start shopping around? move in two to four years

I've never done this stuff before nor do I know anyone who lives in condos, so I know nothing about the process...

[Disoblige]

Some of your questions can be answered in this thread here:
http://forums.beyond.ca/st/348767/waterfront-calgary-and-other-downtown-condos/

I know lots that will be done in 2013 and 2014 and a couple for 2015 (Alura for one). I don't know any that go past that, mainly because I stopped looking after I purchased my condo.

Here's a link too

http://calgaryrealestatereview.com/2011/08/17/calgary-condo-developments-in-pre-construction-august-2011/

[Darkane]

A condo with a Retail of 400k will generally (based on sq/ft) run you fee's upward 500/mth.

Monthly condo fee's have to be included in the initial mortgage approval and lots of people don't qualify.

If I were you I'd buy a 450k house instead with attached garage.

I have a condo now and I HATE it. Condo's are useless if you ask me, unless you're retired and can't upkeep a house.

[Sugarphreak]

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[Disoblige]

It also depends what you are looking for. I personally looked for downtown condos for the sole reason of convenience to my downtown office, and partially as an investment. Living downtown also rocks too if you're young.

Otherwise, I would too purchase a house.

Holy shit Sugarphreak, awesome timing for reaping the rewards :thumbsup:

[Sugarphreak]

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[chibwack]

Yeah I've had a few people tell me to go the house route. In all honesty though, I don't care for roommates and I love being elevated, having amenities, being downtown, etc (and views are a big priority as well). I'd probably lean towards a one bedroom, but if finances allowed a two bedroom would work too, so I could have a home office. Condo fees are the bitch of it lol. Once my student loans are paid down I should be good for up to $2000/month in mortgage & related though, so that's not a huge concern.

How does mortgage approval work on this? Say I want to get into Alura, which I hear should be done in 2015, so right on my schedule (have they had their grand opening/presale thing yet?). Would I just give them a deposit at the grand opening and pick a unit, and thats mine without having to get approved for any mortgage until roughly the possession date? I definitely can't get approved today based on the fact that I've only been working now for 6 months.

Basically I want to do what Sugarphreak did... buy cheap today, pay in 2-3 years, live in it for a year or two, then move on to something better. Hell, I could enter another presale at that point and just keep moving up every 2-3 years...

Edit: some newspaper article in TO just told me that presale prices are too close to resale nowadays anyway and there's no money to be made in that avenue. How true is that? Investment is one of the big drivers in my plan here (ignore that I'm considering a one bedroom :D)

[Disoblige]

I don't think you would make much money (if at all) if you just lived in it for a couple years and sold it off. Or at least, you can't really plan for that to happen successfully.

Alura has been selling for a long time now, since earlier this year.

Also, when you decide to purchase a condo, you need a pre-approval no matter what. Also, you usually put down 5% down of the price of the condo, i.e. $22.5k if its a $450k condo. You need to have that deposit down right away. then 2 years later or at possession date, you put down the other 15%.

If you've only been working for 6 months and don't think you'd be pre-approved for a $xxx,xxx condo, then it's too early to do anything at the moment. Basically, you need to be in a financial situation now that allows you to pay off the monthly mortgage of the condo you want to buy, since you need a mortgage pre-approval.

[ercchry]

it doesnt cost anything to get pre-approved though...

[Disoblige]

There are so many calculators out there that give you more than a good idea of what you can afford. Plus, you should know about what you can afford at the moment as well. If not, then telling a mortgage specialist your situation and what he/she thinks will help too and no need to check your credit history.

OP doesn't seem ready for that yet. I would at least save up 18-20k for a 5% down payment before I think about doing anything regarding approvals.

For now, I'd just look for condos that I'd be interested in and focus hard on getting that down payment.

[ercchry]

real life vs calculators can very by a lot... plus i bet he could be pre-approved with a co-signer no issue... then in 3 years not even need that person to sign :dunno:

[Disoblige]

Sure, but until OP can get that 5% down payment, this is all meaningless at the moment. So OP, my advice to you is save save save so you actually have some buying power :)

[S-FLY]

Originally posted by chibwack So what would the process be there? The way I imagine it would be, find a building I think I'll like, sign up on a waiting list with maybe a 5-10k deposit, and then get pick of the units based on that list, not having to actually do the mortgage/down payment business for another couple years?

And while we're on that subject, where would I find a list of new developments that match my timeframe so I can start shopping around? move in two to four years

I've never done this stuff before nor do I know anyone who lives in condos, so I know nothing about the process...


I'll keep this to point form so it's easier to read:

- Find a building you like, good location, reasonable condo fees and find out what amenities will be around it (or in it).
- You'll need more like $15k-$20k deposit for a $350k-$400k condo, which gets applied towards your down payment.
- That deposit is locked up potentially for years, but pre-construction condo prices are usually cheaper than when the project is finished.
- Some builders give you time to pay your deposit, like half up front, the other half 3 months later...etc.
- I believe you can get a "builders mortgage" up to a 1 year ahead of possession but you'll get a crappier rate than a regular 3 month hold mortgage. You could wait 3 months prior to possession and get a regular mortgage. It depends on market conditions and how comfortable you feel about your finances.
- You can find a list of new developments in Condo Living magazine which I've seen at Safeway, and they're free. It has a map and development names inside.


In my opinion, condos are great. I used to live in McKenzie and HATED commuting to work. Some days if there was an accident on deerfoot, it'd take an hour to get home. Now, living downtown, it takes 12 minutes to walk door to door, even on the bad weather days while traffic is backed up leaving the core, you just walk right passed everyone stuck in traffic.

Don't get me wrong, I'd love to have a double detached garage and a house somewhere and that $400k you want to spend on a condo will buy you a REALLY nice house. It just comes down to what lifestyle you want to live.

[ercchry]

this site is pretty good for projects

http://www.buzzbuzzhome.com/listview/51.0453246/-114.05810120000001/list?loc=Calgary%2C%20AB%2C%20Canada&zoom=10

[Feruk]

Originally posted by chibwack
getting a quality unit in a new development
This sounds like an oxymoron to me.


Originally posted by Sugarphreak
I did a pre-construction project with Arriva in 2005... basically you want three key things;

1) A developer willing to negotiate (look for 10K coupons and incentives) so you can get some upgrades that will help you sell later on against similar units.

2) Good location with high potential... look into the surrounding area, if 2 or 3 years later the area is more attractive to buyers, you will make a small killing on the condo.

3) Timeframe: Preferably long... why? The longer it takes, the more market growth it gets while you pay nothing. It is like having an 300K investment you get to reap the rewards of, but never have to put any money into.

There is a TON of research that needs to be done (past projects by the developer, see who they typically hire for management, see what condo fees do for that developer 1, 2 or 3 years down the road)

Personally I put down my entire life savings of 12K on a unit in Arriva... negotiated a wicked deal with a unit full of custom stuff, waited 3 years (they even paid my rent when it went beyond my notice of possession letter)... by the time I was supposed to move in, I had more than 80K for a down payment and the unit had gone up in value by over 200K and I sold it a year after I moved in. One of the best decisions I ever made.
Congrats, that's an incredible return. I'd argue though that a large chunk of that success (if not all of it) was timing. The same decision made 3 to 4 years later would've put you deep in the hole. You could've done zero research, applied the same timetable, and come out ahead. Tonnes of research gets you farther ahead when it comes to specifics like picking a good builder, but timing the market is predominately luck.

[Xtrema]

Pure luck.

You can also end up with a hole like Metro.

There's another hole on 11th ave, don't know what that's gonna be.

[BananaFob]

Originally posted by Xtrema
Pure luck.

You can also end up with a hole like Metro.

There's another hole on 11th ave, don't know what that's gonna be.

Or even worse, I have a friend who bought into Riverfront pre-construction that has lost 200k in value.

If you're thinking of gambling on an "investment property", 3 years is a really, really long time for something to go wrong in the economy.

[Disoblige]

Originally posted by BananaFob


Or even worse, I have a friend who bought into Riverfront pre-construction that has lost 200k in value.

If you're thinking of gambling on an "investment property", 3 years is a really, really long time for something to go wrong in the economy.
That place looks so shitty. On the outside, it looks so gloomy like it's abandoned or something. Doesn't help that it's beside the shelter either. Bleh. I don't know any downtown condo that is worse than that one to be honest.

[Sugarphreak]

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[BananaFob]

Originally posted by Sugarphreak


Not fair to use that as an exmaple: that is just a failure to do your basic research... almost everybody can tell you that Riverfront was a shitty project being done by a shitty developer. The units were too small to be marketable, the proximity to the shelter is a huge negative and to top it off they stuff in "Condominium First" as the management company that typically gets kicked out for incontinence within the first 2 to 3 years and then they jack up the condo fees by at least triple.

Hey, just pointing out an example, I'm sure it's not the only one if you bought at the wrong time.

That being said, I bought a pre-construction condo in 2009 at Luna and it's worth way more now... But I didn't buy it with the intention to flip.

[ercchry]

Originally posted by BananaFob


That being said, I bought a pre-construction condo in 2009 at Luna and it's worth way more now... But I didn't buy it with the intention to flip.

being in the industry you are in though i doubt you bought it with the intention to lose money though :rofl:

[Sugarphreak]

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[BananaFob]

Originally posted by ercchry


being in the industry you are in though i doubt you bought it with the intention to lose money though :rofl:

Actually wasn't in the industry when I bought it. But at least I lucked out and chose a good development!

[chibwack]

Ahh yeah, 20-30 grand will take a bit longer to pay off. I've got a few things coming together in the next 60 days or so that should put around 10k in my pocket, which I thought may be enough to reserve a unit. Probably still set that aside, but I'll just keep on looking in the meantime!

[Sugarphreak]

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[Disoblige]

Originally posted by Sugarphreak

Take advantage of the first time home buyers plan, that is like an extra 20 or 30%. Only catch is it needs to be placed in your RSP for 60 days.

:werd: If your employer contributes to your RRSP, that's like free money for your down payment :eek:

[flipstah]

Originally posted by Disoblige

:werd: If your employer contributes to your RRSP, that's like free money for your down payment :eek:

I don't think you're allowed to take that unless it's fully vested in your name.

[Kloubek]

Unless I missed it, I don't think anyone mentioned it probably isn't a fantastic idea to put down deposits to purchase property which you are *assuming* you'll be able to afford by the time it is finished being built. I don't know about the rest of you, but my career took a few "unforseen circumstances" before I was actually on my way to (somewhat) comfortable living.

Especially with this shaky economy.

[Sugarphreak]

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[schurchill39]

Originally posted by Sugarphreak
Take advantage of the first time home buyers plan, that is like an extra 20 or 30%. Only catch is it needs to be placed in your RSP for 60 days.

**SNIP**

I was just looking into it and its 90 days, not 60. I wish it was 60 days though because thats almost 2k more I could be using,



Originally posted by flipstah


I don't think you're allowed to take that unless it's fully vested in your name.

If its in your RRSP you can use it. Maybe you're thinking about company pension?

[tch7]

Originally posted by schurchill39
If its in your RRSP you can use it. Maybe you're thinking about company pension?
No, it's very common that you cannot withdraw the employer RRSP contributions until you've been with the employer for a certain length of time (often 2 years).

Until you've reached the end of vesting period, anything your employer contributed to your RRSP is not technically yours and can be taken away.

[chibwack]

Originally posted by tch7

No, it's very common that you cannot withdraw the employer RRSP contributions until you've been with the employer for a certain length of time (often 2 years).

Until you've reached the end of vesting period, anything your employer contributed to your RRSP is not technically yours and can be taken away.
We should point out the vesting period is set by the employer though so you may be able to find a workaround, and most share ownership plans are the same

[msommers]

Sounds like I should take Phreak out for lunch (with unlimited coffee) and bring a notepad; seem to know your shit and I could definitely use the knowledge.

[JordanLotoski]

There are some grea buildings to be built in the city, Im liking the east village.

http://www.thenewcalgary.com/calgary-condos/
http://www.evexperience.com/

Most developers advertise a 5% down, but make sure to read the fine print as almost all of them want you to cover a bond http://drake17.com/blog/introducing-bonddrake-bond

Best bet for you is get in touch with a great mortgage broker that can work with you over the next 2-3 years, he/she can help you get to your final goal.

If you have any questions in the meantime feel free to PM me.

[Sugarphreak]

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[S-FLY]

Originally posted by Sugarphreak


^^ They won't let you sign the contract without a pre-approval from a lender that is guaranteed at possession (be it 2 or even 3 years later), or a huge down payment, haha.

I think that depends on the developper.

[Sugarphreak]

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