Property Investment Tips: Is buying off the plan for me?

By the resi financial blog team, 20 February 2015

Property Investment Tips: Is buying off the plan for me?

Whether you are an experienced property investor or new to the market, you will probably be looking for effective ways to maximise the profit from your investment. With the construction industry booming across the country, investing in new homes or units is becoming an increasingly popular option. You might even decide to buy a property before it has actually been built - this is called buying off the plan. 

However, it is a very different process to buying a preexisting home because you are deciding off plans and sketches, not a physical structure. This route comes with a unique set of considerations, so before you commit here are a number of things to keep in mind. 

Legal pitfalls

One of the main differences you'll notice when you buy off the plan is your inability to walk through and inspect the building. You are therefore entering into a contract based off what the property will - or could - be, rather than what it is. While in a normal transaction you would exchange contracts and pay a deposit once you and the vendor have agreed on a set of conditions, the contract is not fulfilled until the building is completed. 

Getting legal advice is the best way to avoid any mishaps or unexpected costs. Financial and personal circumstances can change quickly, but you don't want to be caught out. For instance, discuss whether there are any serious penalties if you decide to pull out of the contract early. 

Always query 

Because this process includes so many unknown factors, asking questions before you commit to a legally binding contract is essential. There are a few things to consider. Know what rights you have during construction. For instance, determine what rights you have if the building is finished before you have your finances prepared. Similarly, find out how secure your deposit will be if there are any delays in construction - or if the building doesn't get built at all. 

Secondly, you want to make sure you get the best return possible from this investment property. Large-scale strata developments can often be a bit homogenous, so check how much you can customise the property. You want your property to be as attractive as possible to potential tenants or future buyers, so simple adjustments like choosing the wall colours and flooring can differentiate it from the rest. 

You should also ask how many changes you can make to high-use areas like the kitchen and bathroom, or if you can select appliances. You might even want to check on the property's progress while it's being built. 

Property investment is a big commitment, but for all your investment loan needs get in touch with the loan specialists at resi. They will help you find the perfect loan for your specific situation. 

Categories: Property Investment