5 costly mistakes condo buyers make when investing in a condo
I recently presented a real estate seminar to a French community and one question that caught my attention was “what are the 5 mistakes to avoid when buying a condo” or what kind of things should we be aware as condo buyers”.
5 typical mistakes people make when investing in a condo
- Speculate and assume the market will appreciate. It is true that the Canadian real estate market has increased for the past years, mostly driven by Vancouver and Toronto market but real estate appreciation is never guaranteed. Condo investors who use this appreciation strategy will and should have some issues to make money at the resale of their condo. Successful investors will always tell you that you make money in real estate when you buy and not when you sell.
- Not using the current comparable resale value. Real estate investment should be like shopping, and when we shops we are looking for the best price or at least to see if it’s a good deal. Condo investor always ask the comparable of the current resale market value and the goal is to buy under market value.
- Not doing the maths. In any kind of investment but more in the real estate game, investors should always run their numbers. When buying in a pre-construction condo, it is easy to estimate your future monthly expenses with the mortgage calculator, condo fees, insurance and taxes involved. For the potential rental income, always double-check with both free and paid listing website the actual rent in the are you area looking for. If you need an easy investment calculator, just download it for free here.
- Not understanding the tax implications. This is more important for a foreign investor who will face the “holding taxes”. But even you are a local investor, you should always plan with your accountant regarding municipal or welcome taxes in Quebec.
- Not double checking the condos in the area. In a competitive condo market we are currently in and where you will hear there are too many condos in Montreal, it is more than recommended to compare if your future condo investment will outcome the competition: amenities, location, features and price. The worst mistake would be to pay more than the competitor when your condo is a lower quality.
If you are interested in investing or buying a condo for yourself, it is always safe to check with both your accountant and realtor. If you need any help in condo purchase or investment, please contact me here.