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Buying a pre-construction condo takes guts. It takes vision. It takes money. It’s not for everyone, but for those who understand the game and play it well, the rewards are huge. Those who are fearful, lack vision, and have no access to capital will continue to sit on the sidelines and wait. And wait…
Every month I meet people who are looking to buy their first investment unit on a pre-construction sale. Some of them end up buying a unit and in time will reap the rewards. But most get stuck and never actually buy anything. They are trapped in what I call a ‘Losing Mentality’ that prevents them from taking part in one of the most incredible investment vehicles ever.
These would-be buyers all suffer from a similar mindset/perspective that prohibits them from getting into the condo investment game:
- They don’t think like an investor. Investors don’t worry about if a suite is facing the wrong direction, or if the neighbourhood is not one they would like to live in, or if the building only has 3 treadmills instead of 4. The condo is not for you to live in, it is a vehicle to accelerate the growth of your money!
- They listen to bad advice. No offense to all the moms, uncles and internet trolls* out there reading this, but you don’t know anything about real estate, let alone the specific niche of pre-construction condo investment in downtown Toronto. Stop listening to people who have never bought a condo and start following those who own dozens of them.
- They don’t know what they want. So many would-be investors I talk to can’t make up their mind – Do I want to buy new or resale? Am I buying an investment property or is this for me to live in? Up and coming area or established neighbourhood? If you don’t know what you are looking for, you’ll never find it.
- They are risk-averse. Purchase agreements for new condos are downright scary (from the buyer’s perspective), just read one if you don’t believe me. The developers write them, so what else would you expect?! Developers are out to protect their own butts and in exchange they offer you the chance to make a ridiculous return on your investment. If you want safety and assurances that everything will be fine and your money is totally safe, put it in the bank at 1%.
- They are looking for something that doesn’t exist. The proverbial 2 bedroom condo downtown, close to subway, with parking for $250K doesn’t exist. Get a grip on reality and stop dealing in fantasy. Understand the process and the capital investment involved. Understand where the market is today and where the market is going to be in 5, 10, 20 years.
Check back in tomorrow as I contrast this list with a list of common characteristics for what I call the “Investors Mentality”. Things that many of my most successful investor clients have in common. What do you think about this list? Leave a comment or contact me.
*Tongue-in-cheek representation of the types of people who tell you that buying a condo as investment is a bad idea. Many of my clients are actually moms and uncles, although I try not to associate myself with internet trolls!