6 tips to buying an apartment off the plan.
Buying off the plan is one of the riskiest ways to buy property and is subject to market forces beyond your control over a long period of time…
Yes, your investment could be worth more upon completion if the market is increasing. You could even on sell the contract and pocket 10s or 100s of thousands of dollars. More often in recent years, people have made a loss when the apartment is valued at settlement. If the builder goes bankrupt, you may not get your deposit back. If the property undervalues at settlement and you cannot fund the difference, you may not get your deposit back.
1) When is handover? Is the first and obvious question you should be asking. How long before you can move in or start earning a rental return?
2) Speak to a solicitor before you sign? Better yet, find a solicitor/ conveyancer who specialises in off the plan purchases. They will know every legal loophole, fine print, legal terminology, and sneaky clause going around.
3) How many apartments have already been sold? Usually, a developer must pre-sell a certain number of apartments to obtain finance. Are you the first and only purchaser so far?
4) Is the project council approved? In the early stages of a development it’s not unusual for a developer to take a deposit for an apartment where the complex is not council approved. A good developer will know how to work with council to get the project across the line. If you are putting down a deposit in these early stages, beware, the project could change to meet certain council obligations. Know exactly what you are buying.
5) Will your deposit return interest? If you’ve handed over $50 or $100k for an apartment that won’t be finished for 2 years (or maybe 5 years), that lump sum could be earning a lot of interest. So, who gets that interest? You or the developer?
6) Research, research, research. Will the view be built out? What are the developer’s previous projects? Any environmental issues? Is the floor plate a reasonable size compared to existing stock on the market? Get a better understanding of your next apartment investment with THE FULL REPORT. Developed by practicing industry professionals for first home buyers to seasoned investors. This detailed assessment will help you purchase you next Brisbane apartment with confidence!