Buying a property off the plan can be a daunting experience for anyone, yet for first time homeowners it can be a real advantage. When buying a property off the plan, it is important not to rush into the process but instead complete all relevant research and sort out your financial budget. Follow the steps below and you will be on your way to owning your own home!
Buying a property off the plan enables home buyers to purchase at the current market value but only pay a small deposit upfront. This gives time to plan settlements, time to save and time to organise first home owner grants and other possible government incentives. Buying off the plan can also provide opportunity for great investment properties that will produce stable rent and potential capital gain through depreciation and negative gearing.
Just like any home purchase, there are many things to consider before signing a contract.
1. Research the developer, company and builders.
This can be done over the Internet with a quick search into the developers past developments and any newspaper articles. If articles containing court actions are found, alarm bells should be ringing. Check the time frames of past developments and if they were delivered on time. Check out the financial security of the company. Research the builders commonly employed. If they are considered tier 1 or 2, these are genuinely very reliable and efficient builders.
2. Ring the council of the area in which the development will be built.
Determine the zoning areas of surrounding schools and clubs. Ask about future pending developments that may affect your investment. If there is a large opportunity for further developments, it may create oversupply and reduce your potential re-sale value, not to mention turning your home into a developmental jungle.
3. Take the time to inspect past developments of the builder to gain an idea of the architecture, finishes and quality used.
It is very hard to deduce what your apartment will look and feel like by looking at floor plan. Inspect the display suit to gain an idea of space. Make sure you understand the finer details such as the placing and number of power points.
4. Inspect your choice of finishes
Although more expensive initially, it is often worthwhile to invest in higher cost and quality finishes to increase longevity. Carpets often last 10 years, floor boards 15 years and tiles beyond 40 years. When deciding on finishes, go for something simple yet modern that will age well like good wine. Some items that are likely to pay off come re-sale time include slightly wider bench tops, larger ovens, built in coffee machines, double glazed windows and LED lighting.
5. Showing early interest
Showing early interest in an apartment complex will provide you with more choice and flexibility in terms of apartment choice and finishes. A well-known Melbourne real estate agent from Frasers property suggests that apartments on level 7 or 8 are often the best value due to the slightly higher ceilings resulting from the installation of water and sewage pipes above. Floors 3-8 are often the first to sell and retained for the longest. Interestingly, living areas are more popular when facing north or east however come re-sale, there is often little difference in the reflected price.
6. Decide on your priorities.
If street parking is competitive and you have your own vehicle, investing in a car space would seem necessary and a great draw card come re-sale. 1 bedroom apartments are often a lot more common and so a lot more competitive in price. If you have the money to spare, investing in a 2 bedroom apartment would provide you with much higher selling potential. It is important to not forgot your priorities in the hype of buying a new home. Make sure all your wants and needs are covered and that you have the financial means to afford such investment.
Finally, remember that research is the key. If you have spent ample time researching the area, the developer, the prospect of capital gain and your own personal wants and needs then you are in good sted to make the investment. Make sure the contract is filled out with all your requirements and specifications. A skinny contract is a risky contract. GOOD LUCK!
For more information about 'Buying off the plan', visit http://www.propertyobserver.com.au/images/sponsored/eBooks/Frasers/PO-Frasers-Off-The-Plan-3_reduced.pdf to view the Property Observer's Ultimate 'how to' guide for new apartments