Will parent-investors become the new type of condo investors?
Over the past year we have seen more and more parents buying condos for their kids to enjoy in the future. The most common purchase is a pre-construction one bedroom/ one bedroom plus den condo, which typically goes for about $270,000-290,000 depending on the size, floor and layout.
What makes the parent investor different from your traditional condo investor, is that they are in it for the long term. Typically this means anywhere from 5-10 years.
When the parents initially purchase these pre-construction condos, the kids are sometimes as young as 14-16 years. Once the pre-construction condos are ready, parents hope to rent them out for a few years, and have their kids move in once they have finished school and land a good job.
If the parents, for whatever reason, decide that the kids should not move in, then they can continue to rent out the condo (so that it pays itself off), or sell it for an anticipated profit. Parents see this as a “win-win” situation.
It’s no surprise that this trend is taking place. If parents want to invest in their kids’ future, real estate is the clear choice for many. “Banks pay interest which is less than inflation, and stocks are too risky” -according to many parents. Investing in real estate, especially in a growing city like Mississauga, provides the stability many cautious investors are looking for. In addition, buying a property at the pre-construction condo stage, allows parents to “lock-in” the price at the time of purchase.
Typically pre-construction condos require a down payment of 15% in the first year and 5% when the condo is finished. However, having VIP status with many of the condo builders, we are able to give our purchasers special stretched deposits which sometimes require as little as 10% in the first year and the final 10% when the condo is ready in 3 years or so.
There is no requirement for mortgage approvals, or credit checks until the condo is ready. This makes the process of buying a pre-construction condo seamless. With the help of a VIP agent (like us) , clients can book an appointment through us to see the sales centre, be educated about what to look out for and in one afternoon become condo owners. It’s as simple as that.
If you’re a parent who wants to help your kid get a “foot-in-the-door” into real estate, I would love to hear from you! Remember, my buying services are 100% free to you, as I get compensated by the builders directly.
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