Foresight eventually becomes hindsight.

Isn’t it nice to look back on a great investment you made?  Or perhaps to finally move into that spectacular new condo you’ve been waiting so long for?

A lot of people in Toronto are making a lot of money buying condominiums in pre-construction.

So you don’t have $300,000 to invest?  That’s fine, you don’t need it…

Here is a story about a recent investment I made.

In the Fall of 2005, the Landmark Building Group launched a new condominium project called “West Side Lofts.”  I went to check out the project, and I immediately knew it would be a success.

Located on Queen near Beaconsfield Ave, this building would be the first condominium project of its kind in the thriving, artsy, Queen West neightborhood.  The building will be directly across from the Drake Hotel, and steps to the Gladstone.

I chose a 2-bedroom, 2-bathroom unit of 675 square feet for $230,900.  Once I added parking, locker, and the east view, then subtracted their promotions and my comission as a Realtor, I was all-in for about $250,000.

Do you know ANYWHERE in downtown Toronto where you can get a 2-bedroom, 2-bathroom with parking for $250,000?

I provided a $5000, deposit cheque on the spot, and then was responsible to pay the balance of 10% over the next 12 months.

Some developments ask you for 20% downpayment, and I would not advise this at all.  Some ask for 15%, and I would still push for only 10%, which is what I paid.  So after all is said and done, I can reserve my condo at $250,000, to be completed in 2009, for only $25,000 paid over the course of 12 months.

I expect that when I take posession of this unit, I will be able to sell it on the spot for upwards of $350,000.

A $100,000 profit is great any which way, but more intriguing is that my profit is not a function of the $250,000 purchase price (a 40% return on investment) but rather the $25,000 I put down (a 300% return on investment!!).

When the West Side Lofts launched the second phase of this project last month called “The Curve”, the unit that I purchased for $250,000 was now being sold in pre-construction for $290,000.  Seems like I’m on pace with my expectations thus far.

So what do you look for when investing/purchasing a pre-construction condominium unit?

• Floorplan.  This is the most important part.  Don’t waste a single square foot, stress open-concept, minimize hallways.
• Deposit.  Don’t accept anything more than a 10% downpayment spread out over 12 months.
• Corner Unit.  A corner unit will have two of your four walls consisting of windows, all other units have one.  Natural light is an exceptional selling feature, and my unit at the West Side Lofts has floor-to-ceiling windows on the north side overlooking The Drake Hotel (32 feet of windows) and on the east side (19 feet of windows facing the CN Tower).
• Developer.  Do your homework, and make sure that the developer isn’t doing their first project on your dime.  Look at previous projects they have done, and gauge their success or failure.
• Features, Finishes, Ammenities.  Do they expect you to pay extra for better cupboards, nicer tiles, and are appliances included?  Often the basic unit is cheap, and then they swindle you on the finishes.  Make sure the building itself has above average facilities, as most every new development these days will have an excercise room, party room, rooftop garden/BBQ terrace, etc.  The West Side Lofts has an outdoor pool & waterfall as well as a pilates and yoga centre.
• Avoid “Dens”.  The ever-popular 1-bedroom-plus-den is a complete waste of money.  Dens are dark, small spaces that never get used for anything.
• Be Creative!  Consider buying a 2-bedroom and removing a wall to create a 1-bedroom with an amazing open-concept living room that would stand as a one-of-a-kind unit in Toronto.  That’s what I did.