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How do I make sure I get a unit at platinum allocation?

How do i make sure i get a unit at platinum allocation, when can i do an assignment? How can i get into a project that i don’t have platinum access to?

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Andrew: Welcome to the Ask Andrew Podcast. Real questions from real condo investors. You ask, I answer.

Hi and welcome to the very first episode of the Ask Andrew Podcast, thank you so much for listening. My name is Andrew LeFleur and I’m the host of this show, and every week on this show we’re going to be bringing you real, unscripted, live calls with condo investors. They’re asking me questions and I’m answering those questions. If you’re listening to this show, and you’re a condo investor, or you’re interested in investing in condos, this will be a great resource for you.

Just to introduce myself briefly again, my name is Andrew LeFleur, I’m the founder of a website called, I’m a real estate agent here in Toronto, and I specialize in helping people invest in the condo market. I’ve been doing this since 2007. If you’re listening to this podcast, you probably already know me from my main flagship podcast, which is the true condos podcast. You can search for that, or go to my website and download those episodes that’s been running for about three and a half years. We’ve got about 180 episodes there as of time of this recording that you can listen to and learn more about condo investing and hear from many different experts.

This show is not about hearing from experts, the show’s a little bit different. It’s about hearing from you, the condo investor, somebody who’s interested in getting into condo investing, also somebody who, if you have already been investing in condos, maybe you’ve got many units and you’re a seasoned investor, but the point is I want people to hear your questions and I want to be able to provide answers to those questions and that’s why we started this show. It’s going to be a great resource for you to come to and to listen to what other condo investors are thinking about, the questions that they’re asking, and the answers to those questions will I think be of great help to you in your condo investing strategy and as you’re building your portfolio.

Every episode’s going to be just basically a live unscripted call with a particular condo investor. They’re asking me questions, I don’t know what they will be, and we’re just chatting back and forth. What you can do next if you are interested in being a guest on the show, if you have a question that you would like me to answer, maybe you have many questions, I’m happy to do that. Just go to and click on ask a question, and there you can become a future guest on this show. I’d love to hear from you and I’d love to be able to chat with you and answer your questions as well.

For today’s episode, the very first episode, I’m speaking to Claymore. Claymore is a previous client of mine, I helped him purchase his first condo that he lived in several years back, and now he’s come to me recently and he’s interested in investing in condos, and he wants to build a portfolio. He wants to buy multiple units, and some of the things that we talked about on this episode, he was asking about, “How do you know if you’re getting a platinum allocation? How do you know that? How can you be sure that you’re getting in at the very first stage of a new condo launch?” He talked about assignments. He asked about assignments. He also asked about accessing his home equity line of credit, how to invest doing that, and how many condos can he purchase with a home equity line of credit. We had more questions like that. Without further ado, here is my call with Claymore. Enjoy.

Claymore: How does, because I haven’t done it through the typical means. How does this process work if you’re interested? Like say, I’m interested in [inaudible 00:03:44], and Dew East condos, how does the process work particularly when there’s a lot of demand and the lack on supply in terms of … I get that [inaudible 00:03:55] were cheap, and then … What are the next steps? And what do you do to hope that you’re getting into [crosstalk 00:04:05]? How does it the work?

Andrew: Yeah. That’s sort of you’re asking me to pull back the veil from the condo industry and let you into that secret club or the secret society or something, which to some extent there is a little bit of that secret to it. It’s a little bit of art, it’s a little bit of science. A lot of it is just supply and demand. It’s a little bit of everything. There’s not one firm, rock solid answer that I could say, “If you want to buy a condo in X.Y.Z. building, these are the four steps you will take to guarantee you’re going to get a unit.” It just doesn’t work like that. These I would say are the steps you’re going to take to give you the maximum probability of getting a unit, but there is never a guarantee.

The steps would be you know things that we talked about already, that you’re aware of. Number one is you got to work with a top agent. Somebody who has the highest level of access, somebody who has a long relationship with the builder or with the sales company that is selling the building on behalf of the builder or both. That’s number one thing. If you’re working with an agent who is just an agent, or has never sold anything, then you’re dead in the water before you even begin.

Closing a door here. That’s number one thing. Number two is, yeah, you got to get your work sheet in and make sure it’s all filled out correctly, make sure you have your paperwork in order, your ID and everything. If you have the worksheet that is not filled out correctly, if you don’t have your ID, they’re going to just … that’s going to lower your chances again. They’re going to say, “Well this guy’s not serious. He can’t even fill out a works sheet properly.” or “He can’t …”

Some people don’t like giving out their IDs, which I understand, but a lot of builders will look at that and say, “Well, it’s an incomplete file. I’ve got all these complete files here. People who are very serious about trying to get in, and then I’ve got these ones here where the person didn’t send in their ID, or the agent didn’t do it or whatever. Something on this.” That’s another simple thing that you need to do.

Another tip is, you need to be flexible. You need to have as many options as possible. Again, if the building has, let’s say 300 units, and your worksheet has “I want the Rose floor plan on the second floor. That’s what I want.” That’s one unit out of 300 chances of you being the lucky person who gets that one exact unit as it looks because there’s probably 15,20,30 people who also want the same unit. What are the chances of you getting called for that.

But, if you say, “I’ll take any one bedroom up to the twentieth floor,” and you add all those units up and it’s like 35 potential units that you’re open to taking. Your chances of getting one of those 35 units is 35 times better than just putting down one unit. I think that you should only put down units that you’ll actually take, like for some people they put down units just to try to get one on their work sheet, and then they get the unit, and they’re like, “Well I didn’t really want that unit, I’m not going to take it.” Obviously, you don’t wanna do that, but you do wanna have choices. You wanna be flexible. The idea is, it’s better to get something at an early stages of a good project launching, than it is to get nothing or to get … It’s better to get you B choice right away than it is to get your A choice later on when the price is higher.

Those are some general tips, but other than that, specifically to the question of who gets picked, it’s like I said, it’s part art, part science. A lot of it comes down to relationships. Like many things in life, it’s about relationships. I don’t choose, I don’t do the allocation just out of my hands. It’s done by the building, or it’s done by the builder sales company. It’s often used to be a political thing or it’s a relationship thing. “I owe this person a favor or whatever, but this person is higher up the food chain and the top of the pole than this other person.” So many factors that they’re going to take into consideration when they’re making those choices.

Sometimes it’s a first come first serve as well. Sometimes they actually do the first come first serve, so it’s a matter of getting your work sheet in first and quickly. But most of the time it’s more of the ‘who you know’ kind of a situation. Hopefully that gives you some insight into it. I don’t know if that’s the answer that you’re hoping for, or anybody’s really hoping for. You want to a black and white of how you do it. Unfortunately it doesn’t really work like that. What else can I say from my end of things?

I’ll be honest and upfront and I’ll say if I have ten people who want … let’s say I have five people and they all want the same one unit, and the builder gives me one of those units, I ask for five, they give me one. Then I have a decision to make. What am I gonna do? Let’s be honest, I’m not going to give it to the person that I never worked with before, somebody who I have no track record with, somebody who is not known to me. I’m gonna give the unit to the person who’s bought three, four, five, six units from me in the past, who I have a longstanding relationship with, and that we want to continue to work together. That’s just that’s part of it is well.

Now obviously you being somebody new, you’d definitely be in that group of top clients who we’ve done now multiple transactions together, and obviously I know you’re in very good financial standing, and I know you’re a solid buyer who, once you’ve decided you’re gonna do something, you’re going to follow through and do it, as opposed to somebody who may be on the fence, or unsure or shaky, or there might be a chance that they’re going to cancel it during the ten days just because they get nervous or something.

Obviously you don’t want that situation where, a lot of times if somebody cancels the unit that has been allocated, then the builder will not let me sell it again to another person that I might have who wants to buy it. They’ll take it back. Or they’ll say “Okay, you can sell it to the next person, but the new price is $10,000 more than we told you the first time. That’s sort of how it goes, that’s all part of it. Ultimately, the biggest one single factor is really and just truly just supply and demand.

If you’re looking for a unit that there’s one of the units and 20 people want that unit, chances are low. If you’re looking for a unit that only two people want that unit and you are one of the people who want it, then your chances are much better. Does that help? Does that give you some insight into that side of it?

Claymore: I think that’s pretty comprehensive.

Next question is which is the assignment period when you do pre-construction. When do these assignment periods usually stop? Can you for example, if it’s say five years ahead when it’s going to be complete, say in two years time for some reason you would just like to sell if you could. How does that work, in terms of, do you have to have a rule with the builder in terms of nobody can sell their contract so to speak, until three months before completion or? How does that work? Take for example what just happened with the last sale we did, where the price went up quite quickly overnight. If one wanted to sell that away today, but obviously as soon as they could. How does that work? Because obviously the builder I imagine doesn’t want sales to happen before the building’s complete I think from my understanding.

Andrew: Yeah generally speaking you need to know that builders are quite restrictive on assignments. They are not big fans of them. They understand our part of the business, and understand that it’s their responsibility to sort of allow them to happen, and facilitate them, but they don’t really. If the builders could say, they would say nobody can assign because if it does, it can dilute the building and obviously they don’t wanna be competing. They may have units to sell, most importantly they don’t want to be competing against other people who already bought the units or reselling them, in some cases for less than they’re selling it for. That’s the worst case scenario. They are quite restrictive in and what they allow and don’t allow. 

For example, ultimately any assignment when … to your question of when they take place, they take place when the builder allow them to take place. In pretty much any contract the assignment clause is going to say something to the effect of “Assignments can take place when the building is 80$ sold.” Or maybe it’s 90% or maybe it’s 95%, some high number. Then it always has a little line in there that says “at the builders’ discretion.”

Even if the building is 100% sold out, in most cases like a lot of buildings are now we’ll sell out on the first day or the first weekend or whenever it may be, “Wow, the building’s 100% sold out,” you would think “Well, then the builder should just let me assign it the next week I want to.”

No. The builders … it’s always at their discretion. In practicality when do the builders allow assignments? When do most assignments actually happen? It’s right before the occupancy period starts, or in some cases at the beginning of the occupancy period. When the building is almost complete, that’s usually when the building’s are 95% to 100% sold out, prices have increased significantly from when most people bought in the building at the beginning, and it’s a more natural time for buyers to buy in the building, because they can see the building is up, they can see that it’s almost done, and they can say, “Wow, I can move into a brand new building in six months, or in nine months, or in twelve months.”

It makes sense for me to buy an assignment as opposed to … nobody’s really looking to buy an assignment for something that’s not even a hole in the ground, like it’s going to take three or four years to get built. People are saying “What’s the point of buying an assignment? It’s much simpler and cleaner and easier and less capital required to just go to the builder, and just buy directly from a builder. If I’m gonna wait three, four years I’ll just do that.” If I want something in six months then you’re gonna look at an assignment.

In practicality if you’re thinking assignment wise, it’s around occupancy or just before occupancy.

Claymore: I guess, more just a question out of interest. The projects you get involved with, and you have a worksheet for, obviously you don’t cover every building. Does that means you’re just displaying for all with these projects? For example the [inaudible 00:17:08] condos up the street, you never really mentioned much about them. Does it mean you’re not involve with them? I think it is a great location though. I’m just curious, are you able to get involved with these things, or you’re not really interested? There are certain developers you work with? How does that work?

Andrew: Yeah.  Some agents will say they’re platinum agents for every developer in the city, you see that currently in the marketing.

Claymore: [crosstalk 00:17:37].

Andrew: It’s obviously not true. You can’t be a top selling agent for every single developer and every single project, that doesn’t make sense. Obviously I developed relationships and a track record with certain builders over the years. There’s many of them, obviously many top builders, but it’s not every single builder out there. There may be some projects that are great projects that I would say. “Yeah, that’s certainly a great investment to get into,” but they’re not necessarily projects that I’m actively promoting or selling because I don’t have access there, so I’m not going to.

In most cases, it doesn’t make sense for me, or for my clients or my investors to buy into those type of buildings after the initial sales, first sales round is gone. If I’m being invited in round two or round three, not really any point. I might as well just take my investors to something else that is in round one. It is a great opportunity, that they’re not missing out on first release.

With that being said, I’ve got many friends, and many partners across the industry who have relationships, when you expand beyond me just to my colleagues and friends in the business, I certainly … if I don’t have that first access to a building, and I know for sure that one of my friends does. We do that a lot as well, and we help each other get our clients into those projects were I might not have it, but my friend over here has it and we can get in that way.

Claymore: Sounds good. That’s really about everything. I guess off the record here. People live to hear that … Basically what you’re telling me is that if I have a line of credit on my property, and my car, which I do, I can basically go out there and if I know what I’m doing in terms of my income stream for the next four or five years, I can pretty much just buy as many properties as I feel is economically sound for me to do? Is that what you’re saying basically? There’s no sort of-

Andrew: Yeah. Perfect.

Claymore: Because the impression I got was they basically announced that I’ve cut off my leverage by-

Andrew: If they cut off one of your arms.

Claymore: We did not obviously.

Andrew: Again. Only with CIBC and only if you are buying from Daniels. For example, if you want to get a unit at Dew East, also a Daniels project next week or so, then for that one I would recommend getting a mortgage through RBC.

Claymore: Understood. We probably will actually. I have looked and I’m fairly interested in that one, the fact that it’s priced, at an attractive point and it’s got a very good public transport, so I’ll do something for that I think. I’m also very interested kindling ones. I understand of course it’s probably going to be [inaudible 00:21:04] on that great, I will be looking at both of them I think.

Andrew: I’m feeling very confident about getting a unit at Dew East. I’m keenly … I’m hopeful but again just being a very slow building, and a lot of the units are going to be penthouse units, very expensive units. Assuming that you want an average priced unit-

Claymore: I think that from my perspective, [crosstalk 00:21:36]. What I did a discounted cash flow analysis going out of employment basically. To me if you can rent out two studio apartments for say $2,000 a month, and they’re trading $400,000 each, that’s 700,000 or you could get you know $700,000 or $800,000 dollars for two bedroom, and then you rent it out for $3,500. Basically when you discount the cash flows, you’re sort of ahead by having a lot more smaller properties, and if I understand correctly, once you pay down the debts on those properties to the point where your cash for deposit is, that’s not considered a liability on your leverage anymore, so basically you jump to the next [inaudible 00:22:19]. If I understand correctly, when you come to borrow-

Andrew: Yeah. In terms of cash flow, yes. The smaller ones are generally going to be better, but I’ll use the generally. Yeah, in terms of leverage and getting more property and building a portfolio up, it depends on the bank, but if you are speaking to the right bank like Scotia Bank for example is great right now. The banks are changing their policies all the time, but right now Scotia Bank is great, so if you have a rental unit, basically they take the income that you’re producing from it, 100% of the income. If it’s cash flow neutral, then it’s basically they look at that as it’s not a liability, it didn’t even exist. It’s knock on you at all in terms of the ability to get more debt but-

Claymore: That’s sounds quite powerful.

Andrew: Yeah. It’s amazing.

Claymore: It’s [crosstalk 00:23:21] to understand that, but I didn’t myself. I’m teaching myself. [inaudible 00:23:25] because I always thought all your debts pretty much always stay your debts, so it makes sense to pay off all your debt on a mortgage, but basically now it makes more sense to become cash for deposit on many properties and keep growing. Obviously the risk is the prices crash, but if you’ve got enough funding you need to go forward and hold out the five, ten years if there is a crash for however long anyway till the prices are back.

Andrew: Yeah and even if the prices go up, or the prices go down, they didn’t really matter as long as the asset is paying for itself, you’re good. That’s the beauty of a mortgage, is in renting it out, is you’re outsourcing your debt, and your tenant is paying down your debt every single month for you and your tenant is putting … even the property never goes up in value, you’re still making money. Your network is still increasing because your mortgage is getting smaller and smaller.

Claymore: I feel like I started too late on this.

Andrew: You feel like you started to late on this?

Claymore: Yeah. I probably could have bought a previous direction one or two years after I got the first place.

Andrew: Well, it’s the old saying, “The best time to buy real estate was 100 years ago. The second best time is right now. Today.”

Claymore: Hopefully, yeah.

Andrew: You can’t go back, but ten years from now you’re going to say, “Wow, I’m glad I bought it then and I didn’t wait another year, or two years.”

Claymore: Thank you for your time.

Andrew: Great. Okay, great. Thanks Claymore, and we’ll talk to you soon.

Claymore: Okay. See you later. Bye.

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