There are great advantages in buying off the plan that will give new homebuyers the time to save and plan for settlement.
Buying off the plan also gives a first time homebuyer advantages that aren’t available to a purchaser of finished second hand property, like:
- Stamp duty savings
- The ability to customise floor plans and finishes
- More choice in terms of apartment types, which means greater choice of layouts, views and finishes
- Easy payment terms with only 10% deposit required and balance due on settlement
- Security for deposits as all deposits are held in trust
- Alternative deposits, which mean you can use a lower cash deposit, a bank guarantee or a deposit bond (project dependent)
Here are 6 top tips if you are planning to buy off the plan:
1. Get yourself into financial order
Know where you financially stand, what your borrowing capacity is and the lending policies of the bank in relation to the different property types and locations.
2. Do your research
Don’t buy the first property you look at. Understand median apartment price growth, vacancy rates, rents, employment statistics and demographics. Get to know the area you are looking at, transportation linages, as well as current and planned infrastructure projects.
3. Research the development team
Who will deliver this project? What’s the track record for the builder, developer, architect and sales agent? Go and visit some of the builder and developers recent projects.
4. Get proper independent legal advice
Always seek independent legal advice from a specialist property lawyer before signing anything.
5. Understand the time frames
Understand what the time frames are around the delivery of the project and the sunset dates in the contract of sale.
6. Don’t forget the possible risks:
- The project may not proceed.
- The finished product may differ to what you anticipated.
- Expected capital growth may not eventuate like you assumed or value may be less than the original purchase price.
- You can’t physically walk through the property you are buying beforehand.
With thanks to John Meagher, founder and CEO of 360 Property Group for his valuable contributions to real estate that inspired this article.