Buying Investment Property Off The Plan

An introduction to buying a property investment off the plan...

In the evolution of contemporary real estate and property investment several new terms and processes have came to light, specifically the process of “buying off the plan.” This is when purchasers buy a property that is still in the planning stages and is yet to have any physical work done. This is a true investment that can be very profitable for those that can predict the market accurately and can foresee the success of developing property in a certain area.

As a property investor, buying off the plan has a number of benefits, the most important being that you can lock in the price, meaning no matter how expensive house prices become later you will still only pay the amount the property was worth during the planning stages. You may even see large capital gains before you move in, allowing you to flip the property and make a profit immediately.

Other advantages of buying off the plan include delayed settlement on the deposit and stamp duty, giving you a good few months to save or acquire the amount needed. Usually developers require a non-refundable deposit of around ten percent on signing of the contract, with stamp duty 3 months thereafter. The final amount is only ever paid on completion of the development, giving you more time to save or get a loan for the final payment if needed.

If you are in it for the long haul and intend to live in or at least keep the home for a period of time you will also see great savings on stamp duty because it is a brand new property; this can be in the region of $9000. The tax benefits are also great in that you can make significant deductions on the depreciation ratio. Even small benefits like the efficiency of insulation and the lack of maintenance will save you money compared to an older house with poor grade insulation and that needs work done.

If you are hands on with your buying then getting involved with the property early means you might get a say in its floor plans and interiors, making the project your own. It’s far easier to sell what you believe in than somebody else’s vision.

You should always inquire the following to make things run smoothly and to understand what you are really getting:

• How much the various fees are, for example Strata fee?
• Is there a dispute procedure?
• Things like parking areas, rubbish collection whether pets are allowed and can you view the full strata plan?
• Does the developer have a good portfolio and are they reputable?
• How are the finances handled; in trust?

Buying off the plan is a great opportunity to buy a new investment property with significant depreciation tax benefits and stamp duty savings at a locked in price. You can be involved right from the beginning to ensure your property turns out exactly as you planned.