My partner and I are about to put the full deposit on what looks like a pretty good deal on an OTP place on Sydney's lower north shore.
Yeah, it's a little small, but we're not big people… and yeah, it won't be built for 18 months, but we can wait.
We have been looking for what is starting to feel like many months – and we need to be in this slightly annoying expensive area for family reasons.
After seeing this OTP place, we thought all our problems were solved. The stamp duty discount plus NSW FHB grant for new homes means we can get more bang for the buck, and the many similar apartments on offer meant our one little place wasn't being shopped around to cashed up boomers who could swoop in and jack up the price.
After reading all the OTP posts on this forum I'm starting to get a bit nervous. We're not doing this to make butt-loads of cash, we just want a home we can afford without getting wiped off the map financially. But I'm seeing all these warning: WARNING posts and freaking out a bit.
So my questions to you all:
– Should we get an independent valuation?
– The place is in Lane Cove, which FEELS like a great area to buy in. Well, we want to live there! But is it really a good place to buy?
– I'm having a lil trouble researching the developer. What's the best way to do this? (I've already Googled)
– The builder is Savills, the big international. Again, any research tips as to how good their local arm is?
Thanks in advance
Get an experienced solicitor (OTP experience) to go through the contract with a fine tooth comb and see whether they can tip it more your way. How well the building is selling will have an influence on your ability to push for changes to the contract.
You need to ensure that clauses are drafted in the contract that means that if the building does not start or finish construction on time and that this stops you being eligble to either the concessions or the grants the developer will cover your costs. Again market conditions influence the likelihood of success, but if you are relying on those things and they want include them walk away.
D
RPI | Certus Legal Group / PRO Town Planners
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No no no. Lane Cove has tons of OTP's and all are high strata, cheap finishes and poor CG potential because its so over priced. Plus the dwellings are incredibly small.
Why are you doing this? Vals is not going to be an issue per se for lane cove properties but future CG is.
TheFinanceShop | Elite Property Finance
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Thanks to you both for the comments.
Shahin, what we are finding is that everything in our price range is over-priced… full stop. This actually has everything we want. Yep, at around 85sqm for a 2 bed it is a little on the small size, but not compared to what we're renting right now. If this is a bad idea, what do you suggest?
Hi Ellifent
Welcome aboard.
Sorry to jump on the bandwagon – but I'm not a huge fan of OTP either.
One of the biggest issues is finance.
These aren't the types of deals that you approach with only a 5% deposit. Ideally, you need a decent deposit so if there's any issues with the valuation or hurdles with bank policy – a larger deposit will broaden your scope of available lenders.
So if you do decide to go down this path – save as much as you can before now and settlement.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Whats your budget and deposit amount?
TheFinanceShop | Elite Property Finance
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Budget is on the upper slopes of 500.
Deposit is over 10 per cent. This is a decision arrived at only after searching the market pretty intensely.
You have a healthy budget and a good deposit amount. This means you have options. Map out a few scenarios and look at the numbers – see which one adds up. For example, do you buy an established property out west or semi regional with scope to create dual income whilst renting out close to the city? How do these numbers look against an OTP?
What you need to be careful is that you do not purchase a property that doesn't give you access to equity due to poor CG in case you want to upgrade from a 85sqm unit with killer strata in 5 years time?
If it makes you feel better my wife and I were in a similar position many years ago and we were considering an OTP in St Leonards – we ended up purchasing a house in Gordon and haven't looked back.
TheFinanceShop | Elite Property Finance
http://www.elitepropertyfinance.com
Email Me | Phone MeResidential and Commercial Brokerage
A lot can happen in 2+ years!
I just wanted to update this posting with how things turned out, for anyone thinking of purchasing similar.
We went ahead with this plan. Basically, it was the best option on the table for us in difficult market. It certainly was littered with risks, but on balance we have been really happy with the outcome.
The negatives:
– The builders did change the plan once or twice during development. They added extra floors and acquired an extra block, so the number of apartments in the complex jumped up.
– The developers had the option to alter the plan by 5% of floorspace. Our lawyer trying to talk them down to 2%, but they wouldn’t budge.
– The time to completion blew out by, maybe 8 months.The positives:
– There were more buildings in the complex, but we’re used to living in similar places. It hasn’t been a major issue.
– The floorspace concern didn’t come to fruition. We got what we hoped for.
– The timing didn’t concern us greatly as we were young enough to wait it out.In summary, we are really happy with the finished product. The finishings are high quality. The location is good. It’s bigger and better than anything we could have hoped to buy two years ago. We really love our home.
I think a lot of the responders above are doing the logical thing and looking for good INVESTMENTS. Fair enough, it’s an investment forum. But something we never expected happened in the two years we were waiting to settle: both our incomes rose, more than we imagined. The market jumped up sharply. We had our property valued again at completion and it’s now worth more than $50,000 over purchase price.
Ok, It was fraught with risk. Ok, maybe not the highest ROI. But in our situation, it has worked out quite well. We love the place and are now in a position to think about property #2.
Happy ending!!! So happy for you Ellifent!!!
In a similar situation, a firstime investor, can anyone tell if its ok to invest in these OTP one bedroom apartments at http://sq1southquay.com.au/ ??
Appreciate your feedback pros and cons.
Thank you :)
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