Why buy a property with a shorter completion time?
When buying property off the plan, it’s important to keep in mind that there are various completion timeframes available. A property bought off the plan could complete in the next two or three years, if it is a particularly large development with numerous amenities, which might be more suitable for property investors. However, a smaller boutique development could see completion take less than 12 months and better suit first home buyers.
Of course, buying as early as possible will reward you with far lower entry prices compared to a property halfway under construction or a newly completed property. It will also give you more time to save up a larger cash buffer.
However, if time’s not on your side, then there are also many benefits of buying a property off the plan with a shorter completion time.
Why buy a property off the plan with a shorter completion time?
1. Tax purposes
One of the main reasons why investors prefer to buy a property off the plan with a shorter completion time is to do with tax reasons. If you are earning a high income, then an investment property can provide you with massive tax deductions, reducing your taxable income for the financial year. This means, if the property completes sooner, you can take advantage of the tax deductions for the tax year, rather than having to wait a few more years until completion to claim on deductions, expenses and property management fees for example.
2. Rental tenancy changing
Another reason why people want to buy a property with a shorter completion time is due to their rental tenancy changing. If you only have a few months left on your lease, then rather than taking out a new lease and be locked in for another six or 12 months, it might work out better to buy a property to move into. However, bear in mind that the completion and settlement date can change, so make sure you do have some breathing space if you cannot move into your new property immediately.
3. Personal circumstances
As well as rental tenancies changing, you might have personal circumstances that require you to buy your own home sooner. For example, you might be expecting a baby and prefer to have your own home for more stability and to customise it your own way, rather than continue renting.
Buying an off the plan property that is nearing the end of construction might provide buyers with more security and belief that the property will complete. Some buyers prefer to see the development taking shape before they buy, rather than relying just on floor plans and artist impressions.
5. Pre-approval for a home loan
As you are looking at buying a property which is scheduled to complete in a few months’ time, you will be able to get a pre-approval from the bank. This will inform you what your borrowing capacity is and whether the banks will lend to you. It will also provide you with a better idea of what properties are comfortably within your price range to help you find the right property to suit your requirements.
A great benefit of buying sooner is that you can already see what the lending environment is currently like. If interest rates are already low, it’s likely that they will stay the same for a while and not massively jump too much. This means you can lock in a great rate rather than wait and not know how the lending environment will perform.
Things to keep in mind when buying a property with a shorter completion
Although there are some great benefits of buying a property off the plan with a shorter completion, there are some factors you need to keep in mind.
1. Not the best property
If you are buying a property with only three or so months left to completion, then these properties might not necessarily be the best property. However, depending on your circumstances, it could be the right property for you. If the property is well located close to major amenities then that’s half of the work already done. If you are buying as an investment, then rental tenants look for a good location close to transport, schools and shops. If this ticks the right boxes, then your property is still likely to rent well, if it’s in a high demand suburb.
2. Property prices increase
As mentioned earlier, property prices are likely to have increased during the initial launch of the property; however, if you purchase a property whilst it is still under construction, then you are likely not to pay as much for it as you would once the property is newly completed.
3. Less choice
Buying a property off the plan with just a few months left might mean that you are unable to choose the colour scheme. If this is for investment, then the colour scheme might not matter as much to you as it would for owner occupiers.
4. Finances in order
As you are buying with only a few months to go, this means that you need to get all of your finances and documents in order, and sort out your loans. Your pre-approval and lender will help with this.
Get in touch
At iBuyNew we have hundreds of off the plan properties to choose from, many of which have a shorter completion time. If you are interested in buying a property that completes sooner, then why not speak to our expert Property Consultants who can tell you exactly which properties are due for completion and which properties best suit you.
Call iBuyNew today on 1300 123 463 to learn more about what properties we currently have for sale with a shorter completion time. You might also want to consider our house and land packages which tend to be a quicker build.
Alex has previously worked as a Mortgage Broker and Financial Planner and enjoys helping his clients with their purchase of off the plan property in Sydney, Melbourne and Brisbane.
For more information, contact Alex by email, firstname.lastname@example.org, or call 1300 123 463.
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