Pre-Construction Condo Buying Guide

Pre-construction condos are an increasingly popular option for homebuyers and investors looking to purchase real estate in Toronto. As Canada’s largest city continues to experience rapid population growth, the demand for housing has driven prices higher across the board. This has made pre-construction condos an attractive option to get into Toronto’s red-hot real estate market.

This comprehensive pre-construction condo buying guide will provide you with everything you need to know about purchasing pre-construction in Toronto. We’ll cover key topics like understanding pre-construction condos, researching developers, financing and budgets, selecting locations, reviewing agreements, risks and rewards, and steps for investment success.

Understanding Pre-Construction Condos

Pre-construction condos refer to units purchased directly from a developer before construction has been completed on a project. As an investor, you are reserving a specific condo unit based on floor plans before it is built.

Here are some of the main benefits and advantages of investing in pre-construction condos:

However, there are also important factors to consider before purchasing:

By understanding the pre-construction condo market in Toronto, you can make informed decisions about investing.

Researching and Selecting a Reputable Developer

Choosing the right developer is key to a successful pre-construction condo purchase. The quality and reputation of the developer will impact everything from construction timelines to the final product.

Here are some tips for researching and evaluating developers:

Vetting developers thoroughly gives you greater peace of mind and helps avoid potential issues down the road.

Determining Your Budget and Financing Options

Pre-construction condos require larger deposits and unique financing considerations. It’s important to assess your financial situation and prepare your budget accordingly.

Adequate financing and budgeting from the start will allow your investment to proceed smoothly through completion.

Choosing the Right Location and Neighborhood

Location is always important in real estate. Pay attention to the neighborhood and amenities around the pre-construction project.

Choosing the right neighborhood can lead to better rental demand, easier resale, and increased enjoyment as an owner.

Reviewing the Agreement and Signing the Contract

Before entering any binding agreement, it’s essential to understand the terms and conditions laid out in a pre-construction purchase contract.

Here are key steps to take:

Having legal representation can help avoid misunderstandings and ensure your rights as a buyer are protected.

Benefits and Considerations of Pre-Construction Condo Investments

Pre-construction condos come with unique benefits and risks to weigh as an investor.

Potential advantages include:

However, you should also consider:

Overall, pre-construction condos can be a worthwhile investment if you enter informed and work with reliable developers.

Financing and Payment Plans for Pre-Construction Condos

Financing a pre-construction condo purchase is different than financing a resale property. It’s key to understand costs throughout the process.

Proper budgeting and financing preparation will allow your pre-construction purchase to proceed as smoothly as possible through completion.

Steps to Successful Pre-Construction Condo Investments

Follow these tips to set your pre-construction condo investment up for success:

With the right preparation and research, pre-construction condo investing can help grow your portfolio.

Frequently Asked Questions

Are pre-construction condos cheaper than resale condos?

Pre-construction condos typically sell at a premium over older resale units in Toronto’s market. However, by purchasing pre-construction you can avoid bidding wars on completed units.

Can I customize a pre-construction condo unit?

In many cases, developers allow buyers to customize finishes like flooring, countertops, and fixtures for an added cost prior to construction. But you are limited to options pre-selected by the builder.

Will my actual unit differ from the floor plan?

Minor changes to floor plans and layouts are possible during construction. Review your purchase contract closely to understand what changes a developer can make to your plans without penalty.

What happens if I miss a deposit payment?

Missing scheduled deposit payments violates your purchase agreement, which likely gives the developer the option to cancel your contract and relist the unit. Promptly make any missed payments to avoid jeopardizing your investment.


I hope this comprehensive guide provided you with the knowledge needed to make informed decisions about purchasing pre-construction condos in Toronto. With proper preparation and research, investing in a new build condo development can be an excellent way to enter Toronto’s real estate market.

Remember to vet developers thoroughly, understand all financial obligations, choose units and neighborhoods wisely, and work with experienced real estate professionals. If you take the time to educate yourself and enter the process with eyes wide open, pre-construction condos present a valuable investment opportunity.

Pre-Construction Closing Costs

First time home buyers in Toronto have heavily gravitated towards new, pre-construction homes over the years, attracted by the promise of lower prices and high potential upside. However, fresh-faced buyers are often baffled by the closing expenses associated with their pre-construction condo purchase. With so many unique closing fees associated with pre-construction condos, we’ve created a simple guide below to help buyers understand just how much their new condo will cost and what potential pitfalls they’ll want to avoid.

Pre-Construction Condo Phases

Closing costs is a catch-all term used to describe any fees over and above the price of a new home, incurred to complete a real estate transaction. With new Toronto construction, closing costs occur in two stages; at the Interim Occupancy Phase and at the Final Closing Phase. If you’re buying a pre-construction condo then you can expect to go through each of these distinct phases.


With pre-construction condos, there is a time in which parts of a condo are built, and livable, while others are not. Your specific interim occupancy phase commences once you are legally allowed to occupy your particular unit, even if other areas of the pre-construction condo are still under construction.


Your condo’s builder will notify your lawyer of the date of your condo’s closing. Being given this date means that you’re entering the final phase as the City has done their final inspection on the construction and the condo is officially registered. Once you have this date, you should reach out to your lender to prepare your finances for the impending closing costs.

Your Guide to Interim Occupancy Fees

During this time, you’re required to pay a monthly fee to the builder. Since this stage occurs before you’ve closed on the condo, the fees are paid directly to the builder and does not go toward your ownership of the home. You can expect this cost to be similar to what your monthly condo mortgage will be. This fee will be calculated based on the following factors:

  1. Interest on the unpaid balance of the purchase price of your pre-construction condo
  2. An estimate on the municipal taxes for your condo unit
  3. Condo maintenance fees

This fee will be paid for via post-dated cheques to your developer. Since this stage can last anywhere between a few months to two years, it’s important to budget for these fees before signing a purchase contract.

Similarly, once your occupancy period begins, your Tarion warranty begins. This warranty covers you for 1, 2 or 7 year periods depending on which package you choose. Regardless, buyers across Toronto can expect to pay anywhere between $600-$1000/month on top of an enrollment fee.

Your Guide to Pre-Construction Closing Costs

Closer to your closing date, your lawyer will reach out with a “Statement of Adjustments”, a document that highlights what additional costs are incurred as the condo unit is transferred from the builder to the you, the buyer. Along with this document, you’ll be provided with a “Trust Ledger”, which will outline how much money you will need to bring for the closing process.

Unfortunately, there’s no standard amount for closing costs. Every condo in Toronto will charge something different, with costs ranging across the spectrum. However, there are a number of items that most people buying pre-construction condos can expect to pay at the time of closing:


This is often the biggest expense when buying new construction builds. Toronto charges provincial and municipal land transfer taxes for all real estate transactions, so you can expect a rate of >1% for any condo over $350K.


Bad news for all pre-construction condo buyers, the city of Toronto has dramatically increased the cost and number of these charges over the years to supplement small city budgets. Here are just a few charges that may end up on your statement:

Nowadays, you can expect these costs to come out to anywhere between $5-$20K.


You’re required to have a lawyer handle your transaction when buying real estate in Toronto. This will be an additional $1500-$2500.


Since the home is completely new upon purchase, the condo will have to be connected to utilities (gas, water, hydro) for the first time. And unfortunately, it comes at a cost. Hooking up a pre-construction condo to utilities can cost $500-$2000.

Key Mistakes to Avoid

While this list may seem overwhelming, we do have some tips on how you can minimize the final cost on your pre-construction condo.

1. Cap your developmental fee

Since there is no standard closing cost amount, it’s important that you negotiate a maximum cap into your agreement of purchase and sale with the builder. A hard cap is the max amount the development charge can be. A soft cap is a cap on the increase in development charges between when you sign and when the building closes. Make sure you work with your lawyer to get the best one for your situation.

2. Calculate your costs with HST

Levies and your Tarion Warranty are subject to HST, so remember to pull out the calculator to add 13% on everything. You’ll need to have the exact amount of money ready if you’re hoping to close on your new condo.

3. Take ownership of your legal fees

Finding a lawyer who specializes in pre-construction developments is vital to making your buying process as smooth as possible. However, don’t let their expertise intimidate you and remember to always ask for a complete breakdown of exactly what is and is not included in their fee before signing a contract.


Top 5 Areas With Great Walk Scores in Toronto

The Toronto real estate market has been red-hot for years, but condo dwellers want more than just a picturesque skyscraper view; they want convenience. Luckily, with Toronto being the 2nd most walkable city in Canada after Vancouver, there are plenty of condos in top neighborhoods downtown that boast excellent Walk and Transit scores, making city life a breeze for all those who wish to move here.

The Walk Score methodology is determined by a buildings’ proximity to places like grocery stores, restaurants, schools and nightlife. The most coveted neighbourhoods will not only have walkable routes to those spots, but will likely offer a variety of options to choose from, awarding the building or area a score closer to 100. Transit Scores, on the other hand,  are calculated based on the buildings’ distance to the closest public transit option and its operation frequency.

The higher the transit score, the more accessible the building is. Together, the Walk and Transit score make up the fundamental considerations of renters and buyers looking to call the city of Toronto home.

Discover the City of Toronto’s Top 5 Areas with Great Walk Scores

With Toronto being one of the best cities in Canada for walkers, it’s no surprise that there are multiple neighborhoods that offer great walk and transit scores. However, we’ll hone in on the top 5 areas today:

Bay Street Corridor

Walk Score: 99, Transit Score: 100

As one of Toronto’s most densely populated neighbourhoods downtown, it makes sense why  the Bay Street Corridor is so high on our list. Situated within walking distance to the Financial District, the Discovery District, Toronto City Hall, and both Toronto Metropolitan University and University of Toronto, the Bay Street Corridor is as close to perfect as you can get. Having attracted a large population of young professionals and urbanites over the years, the area has developed into a Walker’s Paradise, offering proximity to key areas in Toronto in addition to almost 1500 restaurants, impeccable nightlife options and word-class public transportation. With over 12 buses, 7 streetcar lines and access to the Yonge Street subway line, residents can experience all that Toronto has to offer without the hassle of a car.

Church-Yonge Corridor

Walk Score: 98, Transit Score: 99

Just like its Bay Street counterpart, residents of this Toronto neighbourhood benefit from convenience at their doorstep. With a near perfect walk score, daily errands from your condo will not require much more than your two feet; the area boasts enough restaurants, bars and coffee shops nearby that you’d walk past an average of 43 of them in just under 5 minutes. Beyond eateries, one can also browse trendy shops on Church street, take a stroll through Allan gardens park or enjoy a live theatre performance, ending the night at Toronto’s iconic Yonge-Dundas Square that’s at the heart of the Church-Yonge Corridor. Not up for a walk? Not a problem, as the Church-Yonge corridor also offers amazing subway and streetcar access, making it real easy for you to explore neighbouring areas or nearby parks on a whim.


Walk Score: 97, Transit Score: 100

Coming in third place is this eclectic neighborhood located on the western side of downtown Toronto, made up of two distinct areas; Kensington is best known for its unique offerings of fresh food markets, vintage clothing boutiques, restaurants, bars, spice markets, music shops and a lively art community. Meanwhile, Chinatown is an ethnic enclave offering up some of the best Asian restaurants, grocery stores, small businesses and variety stores in Toronto. This location truly has everything a resident could want and more, meeting the definition for a Walker’s Paradise and offering a plethora of options when it comes to public transport. With OCAD and Queen Street West around the corner, it’s Toronto’s prime location for students, international immigrants, young artists or anyone just looking for a little sparkle in this concrete jungle.


Walk Score: 97, Transit Score: 100

A popular spot among, you guessed it, university students, this Toronto neighborhood has all of its residents’ needs located a stone’s throw away. Whether you’re picking up a quick lunch before class, hunkering down at the library with an extra large coffee, or meeting a friend for dinner on Queen West, everything is a quick walk away and perfect for those without a car. Easy and accessible, the area also features one of the largest green spaces in the city, with Queen’s Park providing interlocking courtyards that form a distinct region of urban parkland in the city’s downtown core. Those with access to a bike can also enjoy the ease of running daily errands with the help of some wheels, with the area boasting a perfect bike score as well. Residents who want to escape the university campus bubble can easily do so with the variety of streetcars and buses available. Need to go even further? That’s not a problem when you’re in the heart of the downtown core and have access to the two main subway lines that run through this vibrant city.

Palmerston-Little Italy

Walk Score: 95, Transit Score:98

Rounding out our list is Palmerstone-Little Italy, an area known to be a little more mature and perhaps a good pick for those looking to avoid the loud hustle and bustle of the core. Located between Bloor Street West and College Street, and Bathurst Street and Dovercourt Road, the area is primarily residential in nature. However, that’s not a knock on its appeal as a potential spot to live, as the neighbourhood still offers many conveniences, with it being home to a collection of enticing shops, interesting food vendors, delightful murals and charming green spaces. With a solid 98 transit score, it’s a quick commute downtown, with the area also offering Zipcar rentals for those who want to venture out a little more. The design of this location is perfect for older couples looking for more spacious homes while still remaining close to all the services they need, or families with school-age kids who still want convenience but with a more peaceful backyard.

Whether you’re buying real estate for the long run or just looking to rent out a condo for a short stint in the city, Toronto offers a great number of neighbourhoods to choose from!

Should I Keep My Condo As An Investment Property in Toronto?

Congratulations! Despite Toronto’s tight real estate market, you’re on your way to purchase your second property in Toronto. You’ve achieved an amazing feat that most residents in Toronto are envious of, but with great power comes great responsibility.

Now you’re faced with a tough question; do you keep your first condo property now that you’ve moved on to another?

Toronto real estate is hard to come by. Some investors opt to sell their first condo property as soon as possible to start fresh with extra funds in their bank. While others choose to maintain the condo as an investment property for years to come.

While you can discuss your next property investment move with an experienced, Toronto-based real estate agent, the decision of what to do with your first property is ultimately in your capable hands.

To make it a little easier, we’ve compiled 4 things to consider when deciding whether you should keep your Toronto condo as a real estate investment property!


Under the right circumstances, even an average investment strategy can generate strong returns and that holds true even when it comes to Toronto real estate.

Real estate investors who purchased their condo property in the midst of the pandemic at record low prices are probably faring much better than those who were on the sell side. Real estate has enjoyed a swift ride up as property prices steadily increased as Toronto recovered from Covid-19 over the last 2 years.

If you capitalized on the drastic lows of the Toronto condo market over the last 2 years and snatched up a nice property below market value, it might be worth it to ride the wave and hang on to the condo for a while longer, as the Toronto real estate market continues to trend upwards. While there’s no guarantee that Toronto condo prices will continue to soar, just like no one could have predicted the exodus of city dwellers that the pandemic brought about, holding onto real estate generally provides positive returns in the long run.

So if you don’t need equity immediately, you may end up on the winning side of a hold strategy after a number of years if you do choose to maintain your Toronto condo as an investment property.


Investors who choose not to sell their first condo property have the option to become a landlord in Toronto and rent the property out to tenants for some extra income each month. While this additional rental income is a great way to pay off a mortgage or cover additional expenses, there are some caveats to renting out your condo. Investing the time to find a long-term, trustworthy tenant in Toronto is definitely a concern for most condo landlords, as you’d want to ensure that your condo is properly taken care of in your absence.

Even if you work with an experienced Toronto real estate agent with investment condo expertise and find a great tenant, they could still leave the property after their 12 month lease is up, leaving you to start the search all over again. Not only would it be a big time commitment, investors also have to consider the numerous responsibilities a condo landlord has to upkeep the property and tend to a tenant’s needs, obligations that might make additional rental income not worth the effort.

However, if the property has been well maintained and the condo is located in a convenient area in the city, it stands a chance to fetch a pretty penny in Toronto’s rental market. Who doesn’t want extra rental income every month?


Another thing to consider, should you choose to keep your first condo and rent it out, is how close you are to the property.

Not only can it ease your anxiety around the type of tenant you’ve rented your precious property to, it can also make life as a landlord a lot easier; property management and supporting your tenants’ needs becomes a lot easier when the drive to the condo is short and sweet. Being in close proximity to your condo also allows you to manage the property yourself, instead of investing in an external property management company, making your investment property’s monthly cash flow significantly better.

If your new home is close to your first condo, it’s another reason not to sell the property, opting to keep the original property as an investment and play the role of Toronto landlord instead. The rental income may just be worth investing your time to tend to your new tenant’s requests!


Toronto’s real estate market is only getting tighter, with demand for property outstripping supply as more and more people flock to Canada’s top city each year. As a condo owner in Toronto, you have the opportunity to capitalize on this demand for property, especially if your condo was built after 2018; with the added benefit of relaxed rent control laws, your investment condo stands to make more than the average, as you can charge more for your condo than other property owners with older Toronto condos.

Additionally, investors can expect their investment returns to grow with time, as Canada and subsequently, Toronto’s, population continues to soar and the demand for condos in the city climbs. As tenants come in and out of Toronto, investors will most likely be able to increase the monthly rent over time, allowing the investment property returns to snowball over the years as rent prices continue to rise across the city. Of course, the assumption here is that your condo is located in a prime location in the city, with lots of potential renters interested.

If not, it may not make sense to turn your first purchase into an investment property and it would be better off as a quick sell. However, if it fits the bill for an attractive Toronto condo suitable for renters, investing the time to rent it out could lead to great returns in the future!


If you decide to cut ties with your first condo and move on to your new home with no strings attached, then so be it. But if you think it through and decide to keep your condo as an investment, you could really set yourself up for long-term returns and success. It’s best to speak to a few experienced, Toronto-based real estate agents to get all the necessary information, but ultimately, you have to search for the answer on your own. If you’re interested in seeing available resale properties, head over to our real estate brokerage at

Consider what will work for your personal goals and how much time you’re willing to invest over the years. You never know, maybe this is the first step to a portfolio of investment properties across Toronto!

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