Buying an investment property ‘off the plan’ has many benefits. Government incentives, tax depreciation, long settlement terms and the satisfaction of owning a brand-new property makes buying into a new development attractive to many property investors.
Here are five things you should consider if you’re looking at an off-the-plan investment property:
- Do your research
Buying off the plan requires more research than your average investment property purchase. Location, size, inclusions and market factors will all play a role in your off-the-plan investment property’s success. Additionally, close examination of contracts and building plans will ensure that you’re getting exactly what you’re signing up for. Background check the developer and builder, go through expected financials with a fine-tooth comb and be aware of any warranties, insurances, timelines and disclosures.
- Hire professionals
Off-the-plan contracts can be daunting creatures that contain lots of clauses that don’t appear in contracts for existing properties. A professional solicitor and conveyancer should be part of your investment team. A qualified Quantity Surveyor should also be a key player given that depreciation deductions against a newly-built investment property can have a huge impact on profitability and cash flow.
- Get your money working for you
Purchasing an investment property off-the-plan buys you time. The developer will require a deposit when you’re signing contracts and then the long settlement period means you can enjoy capital growth while the property is being built. In the meantime, you can start paying down the deposit or use funds available for alternate investment opportunities – all while you have your off-the-plan investment locked in and in progress.
- Get in early
Property developers need early sales to get their projects off the ground. The early bird often catches the best deal. By getting in early you can choose the property with the best view, the one on the top floor, the one with larger floor space or the property closest to the pool!
- Be aware of risks and potential delays
As a property investor, you should be pragmatic and keep your emotions in check. Be aware that the market could shift during construction resulting in lower capital growth. Delays in construction can and do happen and sometimes developments don’t proceed for many reasons.
Thorough research, due diligence and support from your team of professionals will put you on the path to success in the lucrative off-the-plan property market.