OFF THE PLAN PROPERTY PURCHASES
- Written by Melanie Toye, March 30, 2014
Before you purchase an off the plan property, call an independent property expert first.
Here are some examples on how you can go about purchasing an off the plan property:
Put a deposit on the property in the planning or early construction stages. This gives you 12 to 24 months of time. Time in the market place provide a positive or negative effect.
If you watch the market trends every year and see when and how often the market goes up in a certain location, then you might be at an advantage. (Although history does not always repeat itself, it is a good chance that it could be similar).
For example, you put a deposit down on an off the plan property. 24 months later, construction has nearly finished. The growth of the local area is also on the rise. There is more demand for housing. In this case, you have the option of reselling the unfinished property and receive a profitable amount on top of your initial deposit.
Or you could rent out your property once it is finished, or live in it yourself and resell down the track.
There is always an element of risk in any investment. When it comes to buying off the plan, there is a risk the property developer could go broke. This means you could lose your deposit. As it is very hard to get your deposit paid back when the person has declared themselves bankrupt.
Other potential risks to watch out for is if the market is falling at the time of settlement. What this means is, you agreed to a negotiated price for the property, yet the value of the property is less. It could take a decade for the property to increase in value over time. For long term property holders, this might be okay, but for those who are wanting to fast sell after three to five years. This may not be a great find to discover. It may also become an issue when securing finance for the full property amount.
If you do go down this path. Be sure to look into solid companies that have proven track record of delivering properties.
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