We’ve put together a list of the top 5 tips to keep in mind if you are considering buying an off-the-plan apartment to offset the risk of not seeing the property and ensure that you are making a good investment by choosing the right one.
Tip 1: Great price doesn’t always mean a great deal
Make no mistake about it, buying off-the-plan is excellent value for money, you are essentially getting a discount for the fact that you don’t get to see before you buy. It is somewhat of a risky move however as you are legally bound to that property. This means it’s your problem before it reaches final development and occupancy approval. So yes, the price is attractive, but to guarantee you’ve made a smart choice you need to ensure the quality.
You often won’t even realise there is an issue until well after the fact when the individual elements of the property shows signs of trouble. This is why an in-depth examination of the options presented to you during the building process is critical. Don’t be afraid to ask questions about what is offered to you; this is especially prevalent if more than one apartment is being built as shortcuts will likely be taken to save time.
Tip 2: A good real estate agent is vital
You need to ensure that your real estate agent is someone you can trust. Look into their sales history; perhaps they even have online reviews from past clients? You need to be sure that they are genuine and honest and that they have your best interests in mind. Remember that making sales is their top priority, but you are coming to them for their knowledge. They should be able to honestly provide you with all of the information you require about the suburb and property.
Tip 3: Find the right lender
When buying off-the-plan and requiring finance, your loan will be divided, and distributed, in stages, with repayments set as interest only. This is very case-by-case and you’ll want to ensure that you have the right kind of agreement with the financial institution that works to your building timeline. Look into the advantages of an offset account. The goal is to reduce the amount you need to spend while the apartment, if being used as an investment, isn’t bringing in any rental income.
Tip 4: Take advantage of the situation
Depending on your situation there may be tax depreciation benefits or government incentives when buying a new property of the plan. This is sometimes area specific or more relative to first home buyers, but if you listen to the first tip in this article, you should have an agent that can alert you to any eligible exemptions and concessions.
Don’t rely solely on your agent, however, do your own research to see if you can cut down the stamp duty a little.
Tip 5: Recognise the financial advantage of the situation
Tax depreciation benefits and government incentives, depending on which state you are buying in, may be on hand to offer some financial advantage to you during the building or purchasing process. This is particularly relevant if you are a first home buyer. This is where the above tip is essential as a quality agent can give you information about any exemptions or concessions you may be eligible for. Hire an accountant who can let you know about negative gearing if the property is going to be for investment purposes.
Ensure that you do your own research however, stamp duty is significant, so if you can knock some dollars off that, it’s more money in your pocket!
Tip 6: Study and understand the market
Understanding the area, it’s building developments and sales history is vital. Off-the-plan apartments are a great investment; the value is too good to ignore. However, you need to do the same amount of market research as you would with any other kind of property purchase. The rules of investing don’t waiver.
There is safety in knowledge so do your homework, and you may just be able to grab yourself a bargain!