As an investor, it’s understandable you might be sceptical about buying an investment property off the plan. After all, you can’t see it or touch it – you’ve just got to look at the blueprints and trust in the construction company.
The key to being successful with buying an off the plan investment apartment is minimising the inherent risks and maximising the advantages you experience. Read on to find out more.
1) Invest Early On
When buying an off the plan apartment early on, you’ll be able to lock one in at current market value for as little as 10%. Construction could well take a year or two, but in that time, the market value of your property is likely to increase. By getting in there early, you’ll avoid paying fees for being late to the chase down the line.
2) Maximise the Benefits of Depreciation
When you finally take possession of the property, it’s going to be brand new. And as it ages, tax law assumes its value is going to decrease.
These assets within your home which decrease, or depreciate, such as light fittings and electrical appliances, can be tax deducted to save how much you pay on your bill at the end of the year. So, maximise your take-home by tax deducting your depreciating assets from the very start.
3) Select Your Property Carefully
Another reason why it’s so key that you get into a development early on is that, understandably, the best developments are going to go first. So, to maximise the benefit you’ll see from your investment, you need to get in early and select a property based on factors like sunlight, view and how quiet they are – all of which tenants will value at a premium.
4) Look Over the Contract Again (and Again)
Before signing into an off the plan purchase agreement, be sure to have the contract looked over by a property lawyer. Recommended areas for you to have your contract checked for are:
- A cooling off period
- Sufficient disclosure of the marketing plan
- Who holds the deposit, and who earns the interest on it?
- Are you protected sufficiently if you can’t attain finance?
- If there are any property defects, who pays for them?
- What if construction is late, or doesn’t complete at all?
If your contract is airtight – and a legal professional will be able to confirm or deny this. – you’ll have nothing to worry about.
5) Look into the Developer’s Background
Who’s building your property? Past their brand and website’s graphic design, it’s always worth researching who your developer really is – especially reviews from previous customers.
Google is the best place to start for this. Search your developer’s name in the standard search tab as well as the news tab, and look out for information about previous disputes and any court actions they may have gotten tied up in.
Honest feedback from previous buyers is a reliable, realistic indication of the experience you can expect to receive from them. So, do your research and you’ll be kitted out to make the best possible choice.