The real estate industry provides an exciting opportunity for purchase an investment for a variety of people, regardless of financial goals and budgets. Aware of the constantly-changing requirements of Australian people, real estate companies are forever developing their offerings in order to meet their increasingly-specific requirements.
One of the many among these offerings is the off the plan property, which gives buyers the ability to purchase a home that no-one else has lived in before. Buyers are also able to completely customise the layout and colour scheme of the property to meet their preferences.
Like many things, off the plan properties have their positives and negatives. In this article, we’re going to take you through both perspectives so you have the knowledge you need to make an educated decision.
The benefits of buying off the plan
When you buy off the plan, you agree a price prior to building work commencing. Regardless of market fluctuations, this is the price that you’ll pay once the building work has been completed. This is especially beneficial if you’re in a strong market, as the actual property value may end up being far higher. At this point, you may decide to sell immediately and reap the rewards of a significant profit for little work on your part.
With off the plan properties, you only have to put down a small deposit before construction is completed. This is usually around 10% of the total agreed property value, which will be affordable to most buyers. You’ll then have the period of time whilst the property is being built to source the rest of the funds to buy the home.
An increased profit margin is also highly attractive to those buying off the plan. If you buy at the agreed price then move in a year later, your property will already have increased in value. This gives you a great headstart on the property ladder should you look to sell in the future.
The drawbacks of buying off the plan
With all things, there are risks to consider when buying a property off the plan. Take the following into account to determine whether or not this is the right investment opportunity for you.
In the event that the property market crashes, you’ll find yourself paying significantly more than the property’s current value once construction has completed. It’s impossible to predict, but this situation would seriously set you back as far as the property ladder or your investment portfolio is concerned.
When buying off the plan, there’s always the chance that the property won’t actually turn out as you expected. It could look slightly different, or the quality could be way lower than you’d anticipated. Bear this in mind before moving forward with an off the plan property.
Considering the economic instability we’re currently in, it’s not uncommon for property developers to go bust mid-way through a project. As far as your investment goes, this could leave you high and dry. Weigh up the odds of whether or not you feel comfortable taking the chance with this before moving forward.
As you can see, the majority of the risks of off the plan properties surround the uncertainty of the market. If you feel that you can weather the risk, go for it, but be sure to choose a well-established developer to ensure that your property makes it through to completion.