Are you a first-time investor looking for a property investment opportunity, why not consider purchasing a pre-construction house or condo around Toronto and the GTA? At Birks Asset Management, we have extensive knowledge regarding the real estate market, making us experts in navigating our clients to choose the right property for their needs. Buying a pre-construction house as your first investment property comes with plenty of benefits, which we discuss in our blog, “The 5 Benefits of Buying a Pre-Construction Property in the GTA.”
Purchasing a property on assignment comes with a fair share of advantages such as buying a property for less, buyer’s advantage, built-in equity, and in some cases guaranteed warranties. In this blog, we’re going over what a pre-construction on assignment is and breaking down each listed benefit.
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What is a Pre-Construction Property on Assignment
Let’s say someone purchases a pre-construction and decides to sell their contract with the builder before officially taking full ownership of the property. Since this person doesn’t yet own the condo itself, they’ll be selling their Agreement of Purchase and Sale with the builder to a new buyer. As a result, this type of transaction is called an assignment sale.
An assignment sale can occur for numerous reasons, such as a change in the purchaser’s financial situation or a change of mind. Another reason is that the purchaser is looking to “flip” the property. Flipping pre-construction properties is a strategy some investors use to avoid paying closing expenses and cash out before registration, making a profit on their original investment.
If you’re purchasing a pre-construction property from the developer, always request an assignment clause in the contract. By having an assignment clause in your agreement of purchase and sale, you’re able to sell your property on an assignment if necessary. In that case, the builder’s approval is required, but in this case it will be included in the contract.
The Advantages of Buying a Property on Assignment in Toronto or the GTA
Buying a Property for Less
Buying a property on assignment is like purchasing a property today for yesterday’s rates. The seller reduces the property’s price per square foot compared to today’s rates making the cost more affordable for the buyer. Overall, allowing you to save money compared to buying the unit through the developer at the current rates.
Buyers Advantage
Sellers typically want to offload their property as soon as possible before the registration date approaches. As a result, multiple investors may be selling their properties on-site, thus creating a massive amount of inventory. For this reason, you, the buyer, have many choices to choose from, giving you the upper hand to negotiate and drive down the offer price.
Built-In Equity
When you buy a property on assignment, you’ll essentially be buying a property months or years after the investor initially purchased the property. Meaning from the time the property was first announced to the day of sale, the pre-construction property already appreciated in value. Thus, when you purchase a pre-construction property on assignment, you’ll also be buying the equity generated at a better deal.
Guaranteed Warranty
You’re automatically qualified for a guaranteed warranty when you purchase a pre-construction property on assignment in Toronto or the GTA. All newly built properties are governed under Tarion’s 7-year warranty for all new homes and condos in Ontario.
There are definitely several advantages to buying a pre-construction property on assignment in Toronto or the GTA. We are also here to help you in your process, whether you’re looking to buy or sell a pre-construction property on assignment. If you have any questions or concerns, please feel free to Contact Us and we would be more than happy to help.
Pre-Construction Property on Assignment: Helpful Reasons Why It’s Beneficial To You
Are you a first-time investor looking for a property investment opportunity, why not consider purchasing a pre-construction house or condo around Toronto and the GTA? At Birks Asset Management, we have extensive knowledge regarding the real estate market, making us experts in navigating our clients to choose the right property for their needs. Buying a pre-construction house as your first investment property comes with plenty of benefits, which we discuss in our blog, “The 5 Benefits of Buying a Pre-Construction Property in the GTA.”
Purchasing a property on assignment comes with a fair share of advantages such as buying a property for less, buyer’s advantage, built-in equity, and in some cases guaranteed warranties. In this blog, we’re going over what a pre-construction on assignment is and breaking down each listed benefit.
Table of Contents
What is a Pre-Construction Property on Assignment
Let’s say someone purchases a pre-construction and decides to sell their contract with the builder before officially taking full ownership of the property. Since this person doesn’t yet own the condo itself, they’ll be selling their Agreement of Purchase and Sale with the builder to a new buyer. As a result, this type of transaction is called an assignment sale.
An assignment sale can occur for numerous reasons, such as a change in the purchaser’s financial situation or a change of mind. Another reason is that the purchaser is looking to “flip” the property. Flipping pre-construction properties is a strategy some investors use to avoid paying closing expenses and cash out before registration, making a profit on their original investment.
If you’re purchasing a pre-construction property from the developer, always request an assignment clause in the contract. By having an assignment clause in your agreement of purchase and sale, you’re able to sell your property on an assignment if necessary. In that case, the builder’s approval is required, but in this case it will be included in the contract.
The Advantages of Buying a Property on Assignment in Toronto or the GTA
Buying a Property for Less
Buying a property on assignment is like purchasing a property today for yesterday’s rates. The seller reduces the property’s price per square foot compared to today’s rates making the cost more affordable for the buyer. Overall, allowing you to save money compared to buying the unit through the developer at the current rates.
Buyers Advantage
Sellers typically want to offload their property as soon as possible before the registration date approaches. As a result, multiple investors may be selling their properties on-site, thus creating a massive amount of inventory. For this reason, you, the buyer, have many choices to choose from, giving you the upper hand to negotiate and drive down the offer price.
Built-In Equity
When you buy a property on assignment, you’ll essentially be buying a property months or years after the investor initially purchased the property. Meaning from the time the property was first announced to the day of sale, the pre-construction property already appreciated in value. Thus, when you purchase a pre-construction property on assignment, you’ll also be buying the equity generated at a better deal.
Guaranteed Warranty
You’re automatically qualified for a guaranteed warranty when you purchase a pre-construction property on assignment in Toronto or the GTA. All newly built properties are governed under Tarion’s 7-year warranty for all new homes and condos in Ontario.
There are definitely several advantages to buying a pre-construction property on assignment in Toronto or the GTA. We are also here to help you in your process, whether you’re looking to buy or sell a pre-construction property on assignment. If you have any questions or concerns, please feel free to Contact Us and we would be more than happy to help.