Good investment for first time buyer?

[n3xtgen]

Hi everyone!

To start off I am 23 years old and looking for a place of my own. Currently I live in Kitchener/Waterloo of Ontario (1 hour from Toronto). Now Kitchener seems to be getting more popular with the Technology side as more startup are being founded here in what we call the Communitech hub (http://www.communitech.ca). There is also a Google office here which they plan to expand just down the street in the next few years (2016). A rapid transit system will also be build and ready by 2017. Now the Condo I have looked at will be right in the center of all this (10second walk to Communitech hub, and about 2min walk to future transit hub, mintutes walk to parks, shops, markets, clubs, restaurants, city hall, etc. Also close to universities

The condos have not started to be build yet and the estimated occupancy will be in 2018.

Condos that will be built are: http://onehundred.ca

Is this a good investment with everything that is being build around this? I mean I wont be able to move in for 4 years and my closing wont be for 4 years. I just pay the down payment for now.

Opinions? The price of this condo will likely go up high by the time everything is built?



Thanks!

 

[invst4profit]

Bad idea. Stay away from pre build purchasing condos. They make for poor rental properties as they rarely cash flow. Condo rates usually quickly rise once building is completed.

Unlikely they will rise in value due to high volume of resales by speculators.

 

[BlaineBradley]

N3XTGEN,



If you chose to go this route, check and see if there is a bond system in place instead of tying up your money for the complete Down Payment (interest free) for 4 years.

 

[MatPiche]

Hey N3XTGEN,



I have to agree with "invest4profit's" comment above.



Something a lot of people buying new condo's don't realize is that a few years after the building is built, the corporation reevaluates what's going and OFTEN jack up the condo fees. The property MAY cash flow today but unless you have a very hefty buffer, it's too 'risky'. Why 'speculate' and hope for things to happen right when you can just buy properties with a proven system for success?



A big mistake I see a lot of investors making is looking at different, 'shiny opportunities' rather than first looking at what they need. Do you know exactly what your real estate goals are? What does your current lifestyle and schedule look like? It's all about buying properties that FIT with your goals and lifestyle



If you want to chat a little more, I would be happy to answer any of your questions. I'm a realtor and investor specializing in Kitchener-Waterloo. Maybe I can help?

 

[Thomas Beyer]

Buying pre-builts can work in rising markets. It can, however, back fire if interest rates rise, demand slackens or prices stay flat or drop a little. Then you might lose your entire deposit, or worse have to close on a unit that might not cash-flow or is worth less than what you paid for. In some markets buyers were unable to get mortgages to close because the envisioned 25% down mortgage based on new (lower) value now meant 35-40% down.



High risk.



But, high reward potential as a $25,000 deposit could double or triple in 4 years if the market stays strong and you flip before you take possession.



Potential upside has to be evaluated in light of the potential downside.



Mathematical, say you could afford 10 such $25,000 deposits, for $250,000 total. In 4 years 4 go bust, 4 break even, 1 doubles in value and 1 triples. Would you play ? Should you play ? What about if only 3 go bust ? or 2 ? or 5 ? Do the math. Then decide. Some like gambling or this type of speculative investing. Many do not (me included) but that does not mean that some folks haven't made a lot of money.