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Dining room and kitchen, condo. (photos.com)
Dining room and kitchen, condo. (photos.com)

Magazine excerpt

Five traps to avoid when buying a condo Add to ...

1. Trouble with the city/planning department.
If you find that a developer is having difficulties with the city’s planning department, it is usually for a good reason. Even if they resolve their issues, the project timing would be extended and at the very least, your capital will be tied up and not earning money. On the more aggressive side, you could lose your entire deposit to an unfinished project.

2. Slow sales.
Ever wonder why a developer pushes Realtor commission to 5 per cent or offers a Mercedes as an incentive bonus? It is because sales are slow so they do everything in their power to attract buyers and their agents. Unfortunately, sometimes it works. But a project should sell itself. If buyers are currently staying clear, what will happen when it is built?

3. Terrible curb appeal.
Selling real estate will never change – some developers get it and some do not. It sounds simple but some developments fail because of the curb appeal.

4. Extenuating circumstances
Some developments just can’t get away from extenuating circumstances , either by design or due to the building code. For instance, one building in Toronto was prohibited from having any operating windows on the north side of the building. This does not hurt the south facing suites, but the building now has a negative reputation. Using common sense is the best way to avoid involvement in a building that has the potential to gain negative publicity.

5. Too good to be true.
If you find a building or development that is selling far below the market and neighbourhood value, and it seems like it is too good to be true – it usually is and will likely attract the wrong investors. Every market has these developers and they usually mask their awful products with great marketing. Be cautious of below market prices.

The important point to remember is that investing in real estate can still be very risky. It is a big commitment to understand and find the right opportunities in the market place. The good news is that there are professionals that can help you with this.

Whether you decide to work alone or hire a professional, make sure that you have a solid plan; one that is dynamic and flexible enough to shift with the changing markets. The plan should have a timeline, projections, milestones and goals. It is very similar to crafting a comprehensive business plan with your ultimate goal as the underlying motivator. Your strategy and processes will most likely adapt but your goal should not.

Once the plan is in place, due diligence is only a means to an end. Running the numbers, researching and finding the right opportunity is the best part of the game and it only becomes easier after the first couple of deals are behind you.

Really savvy investors will look at hundreds of deals before they deploy their capital and that is what makes them so successful. It is also their ability to think creatively and act on instincts. This talent is developed with experience, but it is important to note that savvy investors have one distinct advantage: they can think outside the box when it comes to crafting deals.

As soon as you can understand that there are no rules, it will automatically put you at a distinct advantage compared to the general population that believes that buying and selling real estate has boundaries.

From Canadian Real Estate Wealth Magazine, a monthly publication focused on building value through property investment, covering topics such as values and trends, mortgages, investment strategies, surveys of regional markets and general tips for buyers and sellers. Adam Brind is the Principal at Core Assets Inc. and Realtor with Remax Condos Plus Corp., Brokerage in Toronto.

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