The Neighbourhood Report

Why Buy Presale? Jenn's 4-Out Strategy

Most people think buying a presale is a gamble but with my 4-Out Strategy, it’s a calculated move. From securing a 2-year mortgage cap to analyzing Disclosure Statements for REDMA compliance, I make sure 'future you' is protected. Read *Swipe* Watch to see the 4 ways we can exit your investment for a profit. 

Buying a home that hasn’t been built yet is one of the most exciting ways to build equity. Why? Because the property is typically at its lowest price point before construction even begins.

Developers need to sell a specific percentage of units to secure their construction financing. To do that, they offer "early bird" pricing. As the building hits sales milestones and nears completion, the risk for the developer decreases, and the price rises gradually. By the time you get your keys, you are often walking into a home that is already worth significantly more than what you paid for it.

However, to turn that potential into a guaranteed win, you need a plan. That’s why I use my signature 4-Out Strategy to protect my clients from day one.

1. The Builder Cap Rate

Most buyers don't realize that a standard pre-approval is only good for about 90 days. For a presale, we secure a Builder Cap Rate.

• Rate Hold: Lock in a rate for up to 2 or 3 years.

• Life-Proof: If you lose your job, buy a new car, or if the market value dips, the bank still funds the deal. No new appraisals, no re-assessing your finances at completion.

2. Developer Reputation

You aren't just buying a floorplan; you’re buying the developer’s ability to deliver. We look for a portfolio of complete projects and quality, in order to give you confidence your home will be finished on time and to the standard you were promised.

3. Decoding the Disclosure Statement

The contract is written by the developer, for the developer. I review it to ensure:

• Your deposit is held in a brokerage trust account according to REDMA (Real Estate Development and Marketing Act).

• You know if your deposit is being used for development, if so is there deposit protection insurance as required by REDMA.

• You understand the "fine print" regarding construction timelines.

4. Reviewing the Details

We look past the flashy showroom to analyze the floorplans, color schemes, parking stall types, and storage locker sizes. These details are what determine your daily comfort and your eventual resale value.

5. The "4-Out" Exit Plan

I never let a client buy a presale without a plan for how to handle the asset when it's finished. First and foremost you must be able to complete the purchase. Your options are as follows:

1. Complete and Move-in: Enjoy your brand-new home and the equity you've built during construction.

2. Complete and Rent it out: Turn the unit into a cash-flowing investment.

3. Complete and Sell: Value often jumps once a buyer can physically walk through the unit. Selling a finished product is usually more profitable than selling a concept.

4. Assign the Contract: If the market hits a "Goldilocks Zone," we can sell the contract for a "lift" before completion. This option relies on the conditions being ‘just right,’ due to market volatility, developer fees and approval but it’s a powerful option to have in your back pocket.

Jennifer’s Closing Keys

These points are just the tip of the iceberg when it comes to navigating the world of new construction. While you can walk into a presentation centre and purchase a unit directly from the development team, I don’t recommend it. Why? You guessed it: they work for the developer, not for you. Their job is to get the highest price and the best terms for the builder. In a presale transaction, a professional in your corner costs you nothing—but it could save you everything.

Welcome to the Neighbourhood,

Jennifer Morgan

778.877.8782

@yourhomegirljenn

team@neighbourhoodre.com