Hi folks,
I’m still relatively new to the investing world, and was hoping to get some advice on buying off the plan properties. I currently have 3 buy and hold properties that are neutrally geared. I’m going to be working another 5 years in a well paid job and at present don’t have the time to be much more than a passive investor. Therefore I am considering buying a few off the plan properties with some cash and equity I have. Is there anything that I need to be particularly wary of when buying off the plan, and does anyone have any suggestions as to how to get good deals with these things? Any other stories people might have of their own with buying off the plan? Basically any advice would be appreciated. Thanks.When buying off plan you are ultimately relying on the strength of the documentation to describe exactly what you are buying. So the first piece of advice is to understand that documentation. If you're not familiar with plans, elevations, specifications and the like then find someone who will look over them for you and explain anything you may not be sure about. The second issue is understanding your contractual obligations and those of the developer/vendor. Things like completion dates, settlement dates and damages clauses need to be understood.
Assuming you can gain an adequate understanding of what you are buying, for how much, and when – in my opinion there are advantages in buying off the plan. For example, there is usually a smaller pool of purchasers early on, so perhaps there's less competition. Also you should expect to save on stamp duty as the duty is calculated on the value of the "land and improvements" at the time of purchase. You also have the competitive advantage of a "motivated vendor" as the developer will often be keen to get the first pre-sales underway so they can finance the project.
Purchasing off the plan is a solid strategy. But as with all purchases you need to do your due dilligence with regard to areas, builders and the companies that you choose to buy through.
Tthe new properties will generate a good amount of taxable depreciation! That and the fact that you will have new home warranites to rely on should you counter any repair proplems that older properies will naturally have!
Gday,
One risk you might want to be wary of that we have seen occur relates to the developers arrangement of finance facilities relateing to the land acquisition, and development of the project.
Unforseen circumstances may arise where successful completion of the development may not be possible upon the terms outlined in their forecasts. This may prevent the successful completion of the project. Consumers may, therefore lose their deposits.
Just a small risk associated with off the plan purchases.
Thanks for the comments guys, very helpful. I’ll definitely look more into it.
Hi there, Check out our website – http://www.multiplepropertyservices.com.au.
We don't tell you what we think you should do nor do we try to sell you house and land packages, off the plan apartments, books, CDs etc!
We work with you – and your own circumstances to help you achieve the goals and dreams you have, using property as the vehicle! We provide ONE ON ONE coaching – not sitting in a room with 100s of others and only giving you half of the story/skills etc.. We work out your goals and objectives, the timeframe you want to acheive it in and then start working through structures, finance, different strategies, asset protection etc.
I too have many postively geared properties – some stand alone tenancy, some dual occupancy, some units.. I have and also assisted my clients through property reno's/flips, add value – buy and holds, options, buying off the plan, developments (I just helped one of my clients through their first development which is going to provide them a minimum return of over $300,000!)
We have also done JV's between clients as well. We also have experience in buying property through their self managed super funds..
There is no wrong strategy or venture you just need to ensure that you are fully informed and aware of the pros and cons of each – continually referring back to your goals to ensure that each step or decision you make gets you closer to achieving your goals! Its also beneficial to have someone there to call upon to help, support and motivate you to make your dreams a reality!
Would be happy to catch up if you would like to discuss further, you can email me at [email protected]
Take care and best wishes on your property journey!
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