Off The Plan
Apartments and Townhouses
Off the plan (OTP) apartments and townhouses for your investment portfolio
Are you considering buying an off-the-plan apartment for your investment portfolio?
This is one strategy that is often deemed too high risk
Property markets are booming around Australia and FOMO (fear of missing out) may drive you to poor decision-making without fully educating yourself on the risks and opportunities of purchasing apartments OTP
Here is a guide to the upside and downsides of investing in an off-the-plan apartment for your property portfolio
Here are some guidelines to get you started
Advantages & Upsides
Problems foreseen with OTP property could be avoided by buying from developers with a GOOD TRACK RECORD and buying in buildings in PRIME LOCATIONS, as well as considering low/medium rise developments rather than high density/high rise options.
With a long lead time to completion for OTP property, seeking a SIZEABLE DISCOUNT relevant to the current market may compensate for all the uncertainty of buying off the plan. Consider the price of your potential purchase versus a similar/identical property for sale in the immediate locale at the time of purchase.
Here are some other considerations to help you manage your risk in the purchase of an off-the-plan property
- Developer/Builder reputation and financial standing
- Prime locations with a long history of strong capital growth
- Buy at a substantial discount to market
- Design forward property
- No oversupply in the development or approval pipeline
- No oversupply in the development or approval pipeline
- Positive cash flow property
- Property that appeals to owner-occupiers
Risks & Downsides
Buying off the plan has become commonplace in Australia; however, buyers should be aware of the issues and pitfalls, especially for new investors
.
Many matters can be negotiated with the developer prior to signing the contract, and quite often they will be willing to do so to make the sale. However, after the contract is signed, they will usually insist upon strict compliance with the terms of the contract and may not be prepared to make concessions regarding any of these matters.
Some of the issues on which they will not negotiate are mentioned below. You will then have to determine whether to take the commercial risk and proceed with the purchase.
- Uncertain completion date
- Commencement of construction
- Rights of the developer
- Standard of the unit and fittings
- Condition of the unit at settlement
- Rental guarantees
- GST risk (where applicable)
Purchase and Build Process
There are several steps involved with an off-the-plan purchase before construction commences. Here is a guide to the purchase process to help you on your way.
- Sale
- Documents issued
- Exchange of contracts
- Finance arrangenments
- Condition of the unit at settlement
- Construction
- Settlement
Take the first step,
and schedule a consultation.
Book a free, no-obligation call with me and take the first step toward discovering a life of personal freedom and choice.
Or email me at hello@portfoliobydesign.com.au.
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