Hi
I'm thinking of buying a unit off the plan and then on selling it before settlement. Has anyone done this before and knows what the fees involved are?
(I realise that if I can't on-sell it, then I have to purchase it and therefore would only purchase a unit that I could afford to keep.)
Also, if I paid the 5% deposit with a deposit bond, would I only need a bank approval for the deposit amount rather than the full loan?
Any assistance would be greatly appreciated.
Thanks!The risk you run in on-selling the property is that you cannot sell it before settlement, which means you will have to settle and buy the property. If this happens then you will eventually need bank approval for the whole loan, otherwise you will risk losing your 5%.
I haven’t done any off the plan stuff yet, but for all I have read and seen buying off the plan and on-selling can be a great strategy in a hot market. If the property will grow in value between when you put your deposit down and when you plan to on-sell it then you stand a good chance of making some money. If the market isn’t hot and the price goes down then it is unlikely you will be able to onsell it for a profit and you might even have to buy it or forfeit your deposit.
Just something to be aware of.
Ryan McLean | On Property
http://onproperty.com.au
Email MeHi Ryan
That's very true, thanks for the warning. I haven't done this either before and am aiming to do as much research as possible first. It seems that you're up with the research too, so thanks again for taking the time out to respond with great advice.
I'm confident that we should at least come out even on our first try. We want to try a transaction mostly to learn from experience and see how we can improve on subsequent purchases. But really need to work out all costs involved first to see how much extra we need to sell a property for to at least come out even.
So far, it seems the costs are stamp duty, capital gains, interest (but we're aiming to use a deposit bond), and maybe selling costs. But I'm not sure how many of these apply if we on-sell before settlement.
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