Buying off the plan means purchasing a property before the property is built or before construction has even begun. Like any investor, the first time you hear this you're probably wondering 'is this the right choice for me?'
What are the benefits of buying off the plan? What are the risks? What's the best way to make sure you're getting a good deal?
Whether you're a first home buyer looking to benefit from government grants or a high-income earner looking to maximise negative gearing benefits, we've prepared a few handy hints for you below to keep in mind when embarking on your off the plan journey.
It all starts with good research. It’s imperative to know and study the proposed property and its respective developer. Like any major investment, buying off the plan could be a high risk if not researched well. Though there are new laws that protect off the plan buyers, it’s also best to do a background check and review the completed projects by the same builder. Be inquisitive about ongoing costs such as strata levies and learn more about rental returns on units in the area to make sure that the property has been priced fairly. In the end, it’s all about sticking to reputable developers with a good history of delivering on their word.
One of the reasons first home buyers and investors opt to buy off the plan is it offers a chance to lock in today’s price. When you buy early or are the first to buy early in the project you often get a better value. So from the moment you sign the contract, you don’t have to worry about prices going up. It’s more beneficial as this could potentially result in a quick profit. If all goes well, by the time development is finishes, the place will have increased in value resulting in a rapid capital gain.
Remember that you’re purchasing a property you cannot physically inspect and the display suite does not assure you it will be the same so you have to carefully review the specs outlined in the sale contract. Ask about the finishes and fittings, curtains and tiles so that you get a clear idea of what exactly you’re buying.
You need to hire a good solicitor and conveyancer to help you with reviewing contracts. With off the plan, contracts have a range of clauses that are different from contracts for already erect properties. And this may become troublesome when the developer changes aspects of the design, completion date, and even the sale price. With the help of a solicitor and conveyancer, you’ll be able to review your sunset clauses, keep track of changes to original designs, and timings for finance and settlement.
Obtaining a pre-approved loan will give you the peace of mind when settlement rolls around. It’s also advisable to ensure you have a decent size deposit when the settlement date arrives. This can act as protection when the price of the property you bought goes down due to a slump in the market. A 10% deposit is what you usually need to secure an off the plan property, you can use your time wisely by ramping up your savings.
As property investors and property managers, we want to help you get the most out of your investments. A9 Property provides first-time homebuyers and property investors knowledge on the world of real estate. Our weekly real estate blog discusses a variety of property-related topics, including property investment strategies, real estate industry trends, and current property market shifts to give you valuable insights and help you make informed decisions. We specialise in off the plan properties – a popular investment strategy in Brisbane and Australia. If you're looking to invest, Check out our carefully selected portfolio of off-market properties for sale or contact us for an obligation-free chat to discuss how you can succeed in the business and make the right property investments.