How to solve the biggest problems with off the plan?

Property investors love numbers. It doesn’t get much more satisfying than snapping up a house or unit for less than its value, renting it out for a good return and then sitting back while the compound growth machine clicks into gear.

Owner occupiers, on the other hand, need much more than this from a property. They want a place to be easy on the eyes, practical for their work and lifestyle requirements and in possession of a comforting home feel.

For these reasons, buying off the plan is probably easier for the former than the latter. It is hard to figure out if a place is just right for you when it is nothing more than a blueprint, council plan or artist’s impression. The finished product can be a similar disappointment to when your favourite book is turned into a movie, and the main character looks nothing like you imagined. All you can consider is whether or not the numbers stack up, how likely the developers are to deliver on their promises and whether the contract conditions are beneficial for your situation.

The pitch

 Developers can be up against it when trying to sell properties off the plan. They need you to help them cover their up-front financial requirements and help ensure the project is a success. For this reason, getting in at the early stages of development can be quite beneficial. Some of the positive points can include:

 The best price – the first properties usually released go for the cheapest, because the developers need fast early sales. Once they meet their financial requirements, they often up the purchase price on the remaining properties to make up for lost profits.

Today’s price for tomorrow’s equity – An off the plan purchase means you can lock in the ownership of a property, without having to settle for an extended period. It may be one or two years before settlement, so capital growth can often make your initial deposit more valuable in the meantime. The risk here is that the value may decrease in this time, so it is important to be sure about the area, not just the property. If you intend to hold the property long term, value fluctuations in the immediate future may not overly concern you.

Time on your side – The long settlement period means you have some breathing room to take care of the investment, or to organise to move house if you intend to be an owner-occupier. You can also use the time to save money and reduce the amount of finance you will need to borrow.

Government incentives – New properties are all the rage at the moment, as far as state and territory governments are concerned. Most provide stamp duty concessions for brand new properties, as they attempt to stimulate their economies through construction. 

Pick of the bunch – Getting in early allows you to choose your purchase from a range of properties within the development. You can grab the one with the best view, or that’s furthest from a busy street. You don’t usually have multiple options within the one particular location when buying an established property. 

If you have a question or would like to know more about buying off the plan join us at our next seminar or contact me directly, I would love to talk to you info@awesomelendingsolutions.com.au

Whether you are looking to buy your first home, move home, refinance or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Contact us on 1300 761 988 or info@awesomelendingsolutions.com.au