Buying off the plan is a smart way to buy property in a prime location at today’s prices.
It allows us to leverage time in the market with a minimal outlay of cash - typically about 10%.
While the property is being constructed it may increase in value by the time you settle in 18 to 24 months, however that’s not always the case.
Even if it doesn’t grow in value during that time frame be assured that it will at some point in the future.
This strategy is not just for advanced property investors. Beginning investors can also take advantage of the tax deductions and yields of a high quality property situated in a growth location.
To ensure that you don’t buy at the wrong time and/or in the wrong market we’ve provided a 10-point checklist for buying off-the-plan. This is the same list that we, and thousands of our clients, have used to gain some fantastic profits.
1. Obviously, you want to make sure that you maximise your depreciation by purchasing new.
2. Look for small developments with preferably less than 50 dwellings. Larger dwellings may be considered if there is something special about them. For example if the development is well designed architecturally or is situated on large lots they may be worth a look.
3. The development should be situated in a strong growth location. An infield area is particularly good.
4. The location offers 5 pillars of economic support such as employment opportunities, wage growth, demand and of course rental growth.
5. The developer is well proven and has a reputation of building quality properties in growth locations.
6. The development should be built near infrastructure such as schools, public transport and entertainment districts, medical facilities, etc.
7. The finished development needs to have high quality finishes as it need to appeal to an owner-occupier in the event you want to sell.
8. As price is important, look for properties below $650,000, where most people are shopping. If you’re able to buy at the low $500,000 price range you’ll have a huge number of available buyers should you choose to sell.
9. Look for a minimum yield of 5%, buying in a location with limited accommodations.
10. Buy a property at today’s value by getting a valuation.
To learn more tips and strategies to a successful off-the-plan purchase register to attend our next FREE Property Investor Night.
You’ll learn more about this and many other strategies designed to help you maximise your capital and arrange your portfolio to achieve the best return possible no matter what the market is doing.
Sam Saggers is CEO of Positive Real Estate and Head of the buyers agency which annually negotiates $250 million-plus in property. Sam's advice is sought-after by thousands of investors including many on BRW’s Rich 200 list. Additionally Sam is a published author and has completed over 2000 property deals in the past 15 years plus helped mentor over 2200 Australian investors to real estate success!
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Disclaimer: while due care is taken, the viewpoints expressed by contributors do not necessarily reflect the opinions of Your Investment Property.