What You Should Know when Buying off the Plan
Historically, apartment living hasn’t been the first choice for most Australians. However there has been a growing acceptance with apartments over recent times and they are becoming increasingly popular with investors, first home buyers and people who are downsizing.
Today many apartments are being sold off the plan before they are built.
Let us take a look at some of the advantages and disadvantages of buying an apartment off the plan:
The advantages are:
- a) By the time they are built and settled, in a rising market, the value can increase, turning a small deposit into a substantial profit
- b) You only pay a 10% deposit or provide a bank guarantee, with the balance paid on completion
- c) You save thousands of dollars in stamp duty
- d) A government grant of up to $10,000 is still available for eligible first home buyers
- e) You often have an option to choose a colour scheme and a range of finishes
- f) As an investor it gives you the opportunity to jump-start your wealth creation
- g) You have lots of time to get your affairs in order before you have to settle
The disadvantages are:
- a) You don’t get to see the finished product before you buy, only what’s on display. The apartment may not turn out as you had expected. Viewing the developer’s previous projects can be of some help
- b) Some people are not good at reading plans, so the completed unit may look and feel totally different to what you may have imagined
- c) In a falling market the valuation at settlement may be less than the purchase price which may cause you problems with financing
Buying a property off the plan or under construction is not a new concept. A few years ago when the orchards in our area were being subdivided into housing lots, the sale of house and land packages were very common. Buying an apartment off the plan is today’s equivalent.
When buying property the number one rule is: location, location, location. The same golden rule applies to apartments – buy in a well-designed building that is close to shops, cafes, and transport. Demand for units in these buildings will always be greater. In our area buying close to Westfield Doncaster is a great example of a good location.