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They can be worthwhile or they can be trouble …. I would suggest trying to only buy these on the secondary market as the developers usually try to price the cost of the higher return into the off plan purchase price. If possible try and get the figures for the "actual" returns the room would have netted if it wasn't on a fixed return and also what the expected nett return is when the fixed return period runs out.
Over the past few years these types of property (in NZ anyway) were sold predominantly in asia where locals were borrowing money at 1-2% and getting 8-9% fixed returns
If you are still interested in this type of investment I know of several available at deep discounts so send me a message.
Have I missed something or are we discussing potentially walking away from a tiny deposit of $1,250? i.e. $500k @ 0.25% as opposed to potentially overpaying for a property by $40,000? Or has someone put the decimal point in the wrong place and you actually mean a 2.5% deposit?
The other thing to consider is that if you have gone unconditional could the vendor not pursue you legally if you fail to settle? If there is no fear of legal reprisal I would cancel the contract let them keep the $1,250 and then if you still want the property go back to the negotiating table with your valuation in hand and make a new offer …. otherwise move on to the next property.
Hi – not sure what your current part time job is but if it's not already in the property industry this may be a good "educational" move for you. I took my first part time job while studying at uni with a local developer and just being around property on a regular basis exposes you to tips and tricks that others may never get to see. I managed to buy my first property at 19 so its definitely possible at a young age. Alternatively you might find a good agent who will let you help with running open homes etc and be present while deals are being negotiated etc …. it all equals knowledge.
Another thing you could do while you are still 17 which will prepare you for purchasing your own properties is to learn to be a property spotter. Find a good deal and sell it to other investors for a fee …. this will allow you to build up your savings so when your time comes you can dive into your own properties head first.
Also put a book by Dolf De Roos on your list – he completed a degree etc but also started investing from a very young age and has never had a traditional style job!
Best of luck!
