Friday, April 11, 2014

Critical Listing + Tips on Investing in Pre-Construction w/ Lisa Colalillo

Hello Friday! Are you ready to enjoy the double digit temperature this weekend?  Spring weather also means the real estate market is getting super active again.  Chris and I enjoy walking around our dream neighbourhood and be the occasional guests to tour some open houses.  Now if you have bought a new place and in desperate need to sell your current home, Critical Listing on HGTV Canada may just be what you need to watch. 

In each episode, the homeowners get tips from experts Jo Alcorn (interior design), Carson Arthur (exterior/ landscaping), and Lisa Colalillo (real estate) on how to improve their home to maximize its appeal to potential buyers.  The transformations are incredible and the investments on renovation/ upgrade have increased to the value of these homes tremendously.    

images via Critical Listing on
First impression is key and if you are looking for ideas to boost the curb appeal or to extend the entertaining zone right to your backyard, here are some of Carson's makeovers:

images via Critical Listing on
Jo has been our design expert on TV for years and I am still amazed that Jo managed to squeeze any dime five times to complete these dramatic transformations with limited budgets.  Fabulous transformation Jo!     

images via Critical Listing on 
Of course the interior and exterior can only do so much to increase the overall appeal of the homes to the prospective buyers.  To make sure the reno budget is money-well-spent, you've got to research on who will likely buy your place, what are they looking for, and what is important to them.  This is where Lisa, our real estate expert, comes in with her detailed analysis / information specific to your property, neighbourhood, and demographics.

Just as you think I am busy enough as-is, Chris and I are planning to purchase a pre-construction investment property.  I'd purchased my own home a few years back and just guided Chris though the purchase of his condo.  But I have never dealt with a developer on pre-construction project and a friend of mine had a not so pleasant experience, so I decided to ask Lisa a few questions on how to best equipped myself for the next adventure.

  • What to watch out for when considering an investment in an up-and-coming area?

Lisa:  Who is going to be the end user? Students? Family? Know who the end user is and make sure the area you are investing in will appeal to that end user. For example, Infrastructure and transit add tremendous value to an area. Being walking distance to a subway station can increase the value of a property by 20% in comparison to properties that doesn't have that accessibility. The Millenial generation (under 30 years old) prefer to walk /bike rather than drive so if that is your end user...transit is crucial. Especially in larger cities.

  • What to look out for when considering buying a pre-construction project? How to avoid troubles (i.e. project delays, quality issues, plan changes by developer) in the future?
Lisa:  You must plan for delays...they are almost guaranteed.When doing your PDI (Pre-Delivery Inspection), if deficiencies come up that need to be must Follow-Up! Follow-Up, follow-up! or it'll never get fixed and then the time period that the builder is responsible to fix it with expire.

  • What condo size is most popular as rental and future resale where potential tenants/ buyers are likely young professionals? 

Lisa:  The best type of condos to buy...(easiest to rent as well as easiest to resale) are 1 Bedroom plus den...if the den has a layout which makes them easy to use as a 2nd bedroom that's the hot spot!

  • when picking finishes, how to avoid "upgrading" too much? What are the most popular and "money-well-spent" upgrades for best returns in different areas such as flooring, kitchen, and bathroom?

Lisa:  Again knowing who the end user is going to be or what your goals are is important...are you buying to rent it out or to flip and resale? If your are going to rent...stay within the standard finishes, because tenants won't take care of it the way an owner would (especially if students) ...if you are flipping it...know who is the client that will buy it from they care about granite counters, larger cities these finishes are almost expected as many builders have made them standard finishes in their you move further away from big cities they may not be as important.

  • When going to the grand opening, what to look out for and how to narrow down the many options to the perfect one when you only have minutes to study/ evaluate the plans and to make the big decision?

Lisa:  Understanding layouts is very important. Most people have a hard time picturing what the unit will look like by looking at plans...that's why buying from plans will always be cheaper than when there's a model suite to look at.
I look at a project in this order:

1) outside building: what's on each side of the building? Look at neighbouring buildings and how they will effect view, shadowing, etc..this may determine to stay away from one side of a building or to be at least a certain floor or higher.

2) once I've narrowed which side of the building has the best view, exposure, etc. I look at the layouts available on that side (I like 1Bedroom plus dens)

3) Review layouts: Best use of space without structural poles (create unusable space), open concept is best. I like layouts that are wide (i.e when you walk-in they extend to your right and left, versus the bowling alley style that run longways. The wide layouts always feel larger to buyers (and has more windows) which creates more value.

  •  Top tips to equip yourself for a successful pre-construction development / investment.

1) There's an interim occupancy charge you pay to the builder from the time you occupy the unit until the building itself is registered. Buy a higher floor unit because if you are going to pay a fee anyways at least you will get something (better view) for the extra charge.

2) if you are buying as an investment, and paying your deposit with debt ( I highly discourage it) keep in mind that there are always make sure you can carry the debt payment on your deposit for 3 years or however long it takes for the project to be ready, before you start making a return on your money.

Thanks so much Lisa for your very helpful tips.  Are you looking to purchase a pre-construction property? Do you have tips to share with us? I would love to hear from you!

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