The Pros and Cons of Investing in Pre-Construction Condos

Greenell Properties Capital
Sep 8
2 min read

Pre-construction condos have long been a favourite among Canadian investors—especially in major urban centres like Toronto and Vancouver. With the promise of capital appreciation and delayed closing dates, they seem like a low-effort investment. But are they really?

In this blog, we explore the real pros and cons of investing in pre-construction condos—so you can make an informed decision.

Three people in business attire converse on a balcony of an empty apartment with wooden floors and large windows. Urban buildings outside.

1. The Pros: Why Investors Like Pre-Construction

a) Delayed Closing = Time to Save

Most pre-construction projects take 2–5 years to complete. That means:

Smaller deposits spaced over time (e.g. 5% every 6–12 months)
No mortgage or carrying costs until completion

b) Potential for Appreciation

If the market appreciates between your purchase and occupancy, your equity increases—without needing to hold a mortgage during construction.

c) Brand-New Unit = Fewer Repairs

Pre-cons offer low maintenance in the early years, making them ideal for hands-off investors or those looking to attract high-quality tenants.

Modern building corner with brick and metal facade under a clear blue sky. Large windows reflect light. Bold and geometric design.

2. The Cons: Risks to Watch For

a) Delays and Uncertainty

Construction delays are common. Your unit may be delayed for months—or even years—pushing back your investment timeline.

b) Price Drops or Market Changes

If the market softens before occupancy, your unit might be worth less than you paid. You may also struggle to assign or rent it out at expected prices.

c) Higher Closing Costs

Buyers often underestimate closing costs, which can include:

Development levies
Tarion warranty fees
Utility hook-ups
Legal and assignment fees

d) Limited Cash Flow

Condos often have high maintenance fees and lower rent-to-price ratios, making positive cash flow difficult—especially with today’s interest rates.

3. Who Pre-Construction Works Best For

Pre-construction may be a fit if you:

Have time to wait and no urgent cash flow needs
Are bullish on long-term appreciation in a specific market
Prefer newer buildings and lower-maintenance units
Understand the risk of delays and budget overruns

Final Thoughts

Pre-construction condos can be a great tool—but they’re not a shortcut. As with any investment, they require research, risk management, and realistic expectations.