Hey guys,
Can anyone offer advice or guidance regarding off the plan apartments and whether they tend to be valued ok on completion etc.
Would you advise doing it?
Will the banks lend on it?
What type of deposit is required?
And what are the potential problems I may run into?
Richard, or anyone else, any thoughts??
Cheers in advance!
Dean
a) Crystal ball – it depends on the property, what else is in the pipeline, what has happened in the past, do you think you are locking the property in at a good price (will it be worth more in x years time at settlement), what do you plan to do (hold as PPOR, hold as IP, onsell prior to settlement)
b) Depends on the property and what you are putting into it etc
c) Depends upon what you negotiate (10% standard or less if you can swing it), you may use a deposit bond or whatever they deem acceptable
d) Potential Problems – construction may not proceed, builder/developer may go broke, could be a scam, property could be well over-market, poor construction quality/does not meet your high standards etcHi Dean
Just realised you've posted this twice – I provided a response in your other thread.
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Dean
Sorry being in the UK still on holiday for another week so a few hours behind the rest of the world.
Sure Jamies answer was satisfactory but feel free to post any other questions and I will happily add some imput.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Off the plan has a number of potential issues you will need to consider before proceeding.
1. Get a reputable and independent solicitor to check contract documents.
2. Off the plan plans often allow some developers leeway to adjust plans slightly. This can see some adjustment to sizes etc.
3. Long term off the plan properties can be problematic from a financial perspective. Banks and mortgage insurers may have limits on the number of units they are prepared to lend funds on.
4. Many contracts will want you to go unconditional with 3 weeks or thereabouts. If building is long term project bank will need to refresh finance application – banks can change their minds and you may be left having trying to (have to) settle on property your bank no longer wants to provide finance for.
5. Lending market is very fluid at the moment – make sure you have sufficient leeway in your borrowing cap for such things as lower valuation upon completion which will require bigger deposit, increases in interest rates reducing borrowing cap and so on.
6 Related to 5 you may want to restrict buying cars, buying furniture on nothing down deals, increasing credit card limits, changing jobs etc while the project is in construction.Tread warily.
Hey Dean,
Just bought my second IP, this time in Brisbane. Brand new 3 bedroom unit in complex.
There were 3 different buyers purchasing same layout of unit who had 3 different valuers from 3 lenders.
One came in and valued at the sale price, one valued at sale -5% and mine valued at sale -10%.Exactly the same property but with a $30000 variation.
I ended up using 20% LOC investment loan for deposit and remainder 80% from different lender.
Ended up needing to go unconditional on loan before it was completed, but I had the advantage of seeing already completed units in complex that I could assure myself of the finished product. Stick with a reputable developer and where possible, look at finished projects, maybe even 5 years prior to see how the structures are wearing and maintaining value.
I would do it again, looking for my next property in 12 months time.
Dean Potter wrote:Hey guys,
Can anyone offer advice or guidance regarding off the plan apartments and whether they tend to be valued ok on completion etc.
Would you advise doing it?
Will the banks lend on it?
What type of deposit is required?
And what are the potential problems I may run into?
Richard, or anyone else, any thoughts??
Cheers in advance!
Dean
Dean, i keep it nice and simple.
1. depends on the property type- is it studio apartment? etc..make sure it’s OVER 50 square meters total living space and it’s not a student apartment or anything – it’s not impossible to finance, just more complex- but still possible.
2. Make sure it;’s a respectable company and builder- if not you might have trobule with the valuation. For off the plan it’s based on comparable sales + who the builder is..ie what sort of quality does the builder normally supply.
3. For off the plan you can order “stage valuation”, meaning as it becomes closer to the build date the valuation price will just go up…
Just remember the BANK will finance these units, it just depends who the client is and is the bank willing to finance to you( based on what you have and how much you earn…)
End of the day, it depends What your buying and who the client is?
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
Email Me | Phone MeSame Banks. Better Rates. Served With a Passion.
I provided a few comments in this thread – https://www.propertyinvesting.com/forums/property-investing/help-needed/4335329
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
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