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New Home Buyer: Family and Friends and The Platinum Launch For Condo Investors

Welcome back. This is our second article in a series of posts looking at pre-construction condo launches. This week we look at two very significant stages of the condo launch that are very important for every agent and investor trying to stay ahead of the game.

We showed a graph that shows the difference between price and unit availability. The chart depicts the notion that price goes up and selection goes down at the conclusion of every stage therefore it is important for an investor to purchase a suite as early as possible in order to get he best prices, choice and maximize their ROI.

The family and friends event is traditionally the best stage for an investor to get both the best price and unit selection. However, as the name suggests, this event is commonly restricted to friends and family of employees of the developer. Investors may not have the chance to attend this event. This stage is not typically advertised to any members of the public. However, in recent times we have witnessed a shift with regards to how the Family and Friends stage is handled. Developers like Chestnut Hill homes have been seeking alternate ways to gain more interest for their development. Chestnut Hill Homes have contacted listing websites like CondoNow in an effort to invite investors to their family and friends event. If you follow the listing, San Francisco By The Bay 2 on CondoNow, you will be given exclusive information on how to attend a family and friends event. This is just one example in which a developer has been using listing services in an attempt to break tradition and reach more interested buyers.

After the Family and Friends stage there is the Platinum launch. Platinum agents traditionally sell a large volume of pre-construction condominiums and rarely target the re-sale market. Best location, layout and suite amenities obviously tie into reselling the unit or being able to rent it. The return on the investment is traditionally higher for an investor who has a “prime” unit in a project. Another significant benefit to the VIP Launch is the fact that developers offer “day one” pricing.

We described how a condo launch is very similar to a new company launching in the stock market. When a company launches in the stock market, the shares of the company are given their first price on day one of the launch. During a condo launch, the Platinum stage is the first time a unit is officially priced and for this reason, the pricing at a Platinum stage is labeled “Day One” pricing. Day One pricing is the starting price and is typically the least expensive the suites will be.

According to real estate firm Urbanation, rent grew 4.2% in 2013 from the previous year, to an average of $2.37 square foot. From this figure alone we can see that Day One pricing is the most lucrative investment opportunity for any investor assuming we see a rental increase like witnessed in 2013. These figures further exemplify how important the VIP and Family and Friends event can be.

In the Toronto pre-construction market, staying ahead of the game is vital to increasing an investor’s rate of return. Every stage of the condo launch is an investment. Next week we look at the VIP Agents and Pre Registration stage and examine the incentives that occur at these stages.

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