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New property investors are often intimidated by the process of buying an investment property \u201coff-the-plan\u201d, however knowledge is a powerful tool in that not only can it help you navigate the purchasing process, it will help alleviate the apprehension that often comes with trying something new.<\/p>\n
An off-the-plan strategy is a great way to buy a property at today\u2019s value, without a huge outlay of cash. Use the following tips as a guideline when purchasing your first (or next) off-the-plan property:<\/p>\n
Grasp a thorough understanding of the market cycle and its ability to grow by considering the six market drivers \u2013 infrastructure, yield variation, supply and demand, population, economics and demographics.<\/p>\n
Go after low density, boutique properties because:<\/p>\n
Buy ONLY in Stage 1 of a development. This is where you\u2019ll get the best price for the investment property \u2013 buy later and you\u2019ll reduce your profits significantly.<\/p>\n
Don\u2019t count on the agent\u2019s idea of the property\u2019s value. Get a \u201cvaluation summation\u201d done at the commencement of the contract; not later in the process. The value will include the cost of the land and the building.<\/p>\n
Buy below $600,000 because of the wider appeal in the marketplace \u2013 just in case you decide to sell. The \u201cmeat and potatoes\u201d range of around $200,000 to $500,000 is where you want to be.<\/p>\n
ALWAYS be prepared to settle after completion. Don\u2019t sell half-way through construction. Have your financing arranged before entering into the contract.<\/p>\n
We recommend that you purchase an off-the-plan under a 12 to 18 month contract. Since you\u2019ll only have a deposit into the deal and the property value should rise, you should be able to secure a 100% cash-on-cash return.<\/p>\n
Don\u2019t miss out on opportunities because your deposit is tied up in a deal with a long settlement date. Plan ahead and make certain you won\u2019t need your deposit to fund any great opportunities which might come along while you\u2019re waiting for settlement.<\/p>\n
To obtain funding for their projects, developers are required to pre-sell a certain number of properties. This fact can benefit you as a buyer because you can ask for additional and\/or better inclusions as part of the process \u2013 this will help differentiate your property from others in the development; a difference which just may have a favourable impact on your rental yield!<\/p>\n
Timing is important. Buy an off-the-plan property in a market which is set for growth, so that while you\u2019re waiting the 12 to 18 months for settlement, your property can increase in value without your having to cash flow it from your back pocket!<\/p>\n
This short checklist only covers a small portion of the things every property investor should know about buying an off-the-plan property. To find out more about this and other property investment strategies, come along to our next Property Investor Night.<\/p>\n
There\u2019s no obligation to attend \u2013 just simply register [here] and we will get in touch with you. At the event, you\u2019ll get the opportunity to meet with like-minded individuals, pick up great tips and strategies from seasoned property investors who all share your passion for property investing and you\u2019ll receive a free property investor\u2019s toolkit \u2013 chock full of great content designed to help get you off to a nice running start!<\/p>\n
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\nClick here to like us on Facebook and see more updates like this.<\/a><\/strong><\/p>\n Hey there, do you enjoy the TRC-Gorod Blog? If you did, why don\u2019t you book into a Property Information Night in your area and get more information from our team. You can do so here<\/a>.<\/p>\n