off plan

Points to consider;

RULE 1: THE DEVELOPER WILL PHRASE THE CONTRACT TO SUIT HIM; NOT YOU.

1. Find a property lawyer before you sign anything. If you don’t like the contract try to change it.
2. You save on stamp duty, but quite often the finished product is above market value anyway. It’s an old marketing trick to suck you in.
3. The contract will be worded such that the builder can exit the contract whenever he wants, but you can’t.
4. If there is a rental guarantee involved, you will be funding the rent via the purchase price you have agreed to. Ask for the guarantee to be removed and the value of the rent to be deducted from the purchase price.
5. Quite often, the developer will substitute fixtures and fittings (without telling you) that you have agreed to in the contract with inferior products, or at best, different from what you were promised (or maybe this wasn’t even in the contract). On this note, get a complete list of brands and models of the fixtures and fittings with the contract, along with photos, and have all of them written into the contract with no substitutes without your approval. The developer will try to avoid this.
6. Don’t buy now – wait 3 months, then go back and see if the development has sold out. If it hasn’t, offer a 20% discount to buy the unit. The developer will be anxious to sell then as he needs the cash to move on to the next project, or may need another sale before he can approach the Lenders for the construction funds. A lot of Lenders won’t approve finance for the developers until they have achieved about 50% pre-sales. The deal of the century comes along every day.
7. If you are planning to be an owner-occupier, remember that a lot of the units may be bought by investors who will rent them out. You may cop noise and ugliness from your neighbors.
8. If you are buying as an investor, remember that your unit’s value is only worth what the others sell for. If one unit is sold by a distressed Vendor at a discount, then your unit is worth that.
9. If a vendor takes a big discount on the rent to get a tenant, that’s all the rent you can expect to get too.

I hope I haven’t scared you off, but you are entering a shark infested ocean and you need protection. As long as you know the pitfalls, it is relatively safe.

Cheers,
Marc.
[email protected]

“we get sent lemons; it’s up to us to make lemonade”