Are you looking to buy an off the plan property? Considering an apartment off the plan
that won’t be ready for 6, 12, 18, 24 months? There is a lot to understand before you decide to make the decision to buy off the plan so let’s see what it’s all about:
What is buying off the plan?
Buying off the plan is when you decide to buy an apartment, townhouse or house that has not been built yet. You are making the decision to buy before the development has started construction or while it is under construction. You can physically walk through the property and are making a decision to buy based on reviewing floor plans, images and detailed information provided by the developer, architect and real estate agent.
What are the Benefits of buying off the plan?
1. Buy now and pay for it later: When buying off the plan, you only need a 10% deposit at the time of exchange. There is no need for a mortgage until the time you settle the property sometime in the future. Buying off the plan gives you time to save for a larger deposit.
2. You have a greater choice of property when buying off the plan. If you are buying established property, there may only be 1 property for sale in a building. When you buy off the plan, if you work with iBuyNew that gets early access to each development then you have choice of aspect, level, floor plan, type, colour options and more!
3. Once a developer achieves the presales and starts construction they often increase prices for those that look to buy on completion. Buying early gives the buyer the chance to buy at a cheaper price to those that buy on completion.
4. Stamp Duty savings are available in some states when buying off the plan. Best to speak with an iBuyNew consultant to find out what stamp duty savings you are eligible for
5. As a property investor, there are a number of reasons why you would buy off the plan. One reason is the large tax benefits you attain as you get to claim maximum depreciation on a new property.
While these are some of the benefits of buying off the plan there are some risks you need to be mindful of. These can include:
1. Doing your due diligence or having someone do it for you is critical to the success of your investment. At iBuyNew we conduct due diligence on all our projects to minimise any chance of something going wrong. Many developments never get off the ground or can be delayed for years.
2. Designs of floor plans can vary greatly within a development. Buying the wrong floor plan can drastically change the outcome of your investment. We have seen it time and time again from clients that don’t listen to the guidance we provide. We do this every day… we know what we’re talking about!
3. Never buy a property where your deposit isn’t sitting in a trust account or when a developer requests that you release the deposit to them. These are danger signs and should be avoided at all measures… especially if you think you’re getting a deal... the chances are you are going to lose your money!
4. While one of the benefits of buying off the plan
is capital growth during the construction of the property, if there is a major economic crisis, this could see your property fall in value. This will leave you with a funding gap on settlement which you will need to cover. Make sure you have a buffer and are not pushing your budget too high.
5. Expectations of what you think the quality of the project will be vs what is actually delivered. This once again comes down to knowing who you are buying from and ensuring you have done your due diligence. It also may just be that you haven’t understood exactly what you are buying… make sure you ask the questions upfront so you know what to expect on settlement.
While you think buying an off the plan property is another normal real estate transaction, it’s not. You need to understand it and more importantly you need to engage a solicitor or conveyancer that is experienced in off the plan contracts. We have seen many buyers not proceed on the purchase of an off the plan contract because their legal advice was incorrect. This has cost clients hundreds of thousands of dollars over the years. Speak to an expert… not to your friend!
If you have decided that buying an off the plan property in Australia is right for you, consider getting in touch with iBuyNew by calling 1300 123 463 to discuss the next steps. iBuyNew are specialists in New and off the plan property and can help guide you through the process answering any questions you may have along the way.