Sticking to the Plan

Buying an investment property offers the opportunity for significant wealth creation through high capital growth but one of the common questions for investors is should I buy off the plan or not?

The Definition

Buying off the plan basically means buying without seeing – you are buying a home that has not yet been built. Generally speaking, only townhouse complexes and apartments are sold in this manner.

Before you make a decision about whether you should purchase of the plan or not you need to consider the following pros and cons.

Pros

• Part of the appeal of buying off the plan is the idea that you are buying a property of tomorrow, at the current property rates. With the way the property market is headed, this means accelerated capital gains and wealth growth even before the property is completed.
• You can also save considerable amounts of money when you are buying off the plan. These savings come in the form of significant reductions in stamp duty and receive tax credits through investment property depreciation, (you may also qualify for the Australian federal government’s first home buyer’s grant, which is higher for new homes).
• Another advantage of buying off the plan is the ability to influence the final interior plans and finishing.

Cons

• While buying off the plan investors will often be told that it boasts rental guarantees, it is critical to remember this is not the case. Off the plan buying does not provide any additional security in relation to rental guarantees.
• Secondly, the quality of finish and time of delivery may vary greatly and unless there are clear penalties built into the contract there will be little you can do.
• When buying off the plan there is a risk that the property will not be constructed due to the build/developer running into financial problems. While you are unlikely to lose your money in this scenario, it is likely that such a problem will have a high opportunity cost with the loss of time and other investment possibilities.
• Quality in investment properties is very important, but when you buy off the plan you run the risk that the finished product is not of the standard you expected.

To know whether it is a good idea to buy off the plan it is always a good idea to get third party advice. This will help you avoid failing victim to unscrupulous developers and ensure you end up with an investment property that delivers great returns.

If you would like help with making a decision about buying of a plan please contact the team at greatinvestmentproperties.com.au

For further information, please Contact Us today.