Investing in property has always been considered a safe and good long term investment. Investors consider investing in property as a safe bet. With a little planning and research, buying an apartment off the plan usually turns out to be a good investment. But there are some pros and cons that you should be aware of before investing in this venture.
You get the benefit of buying the apartment right of the drawing board. You pay the current price and not the price it’s expected to escalate to after completion. It’s very rare that an apartment bought of the plan does not increase in value.
Low capital outlay:
You just need to pay a maximum 10% of the agreed price to secure the apartment. This gives you enough time to plan your finances and arrange future payments.
Stamp duty saving:
Some state governments of Australia offer reduction in stamp duties and bonuses for buying off the plan. You can easily save thousands of dollars.
Choice of apartment:
Property developers give you a choice when buying off the plan. This means you get to choose an apartment with a garden, or one with the best view. You can also choose the interior, color of walls; fittings, etc.
Brand new property in Australia has a 7 year builder’s guarantee. So you don’t have to worry about any structural or interior fault that might occur, as this will be fixed at no cost to the owner.
Increase in value:
Apartments tend to go up in value once they are completed and people start moving in. If the apartment building is in a good location, and well constructed the price is bound to increase. That’s when you can decide whether you want to hold on to it or put it up for sale.
Drop in property market:
Investing in any form always has a risk associated with it. The fear of a sudden drop in prices is one of the biggest fears that haunt investors.
Rising interest rates:
Interest rates might rise when the property is completed as the time lag between buying and the apartment being ready can vary between 6 months and 2 years.
The developer may declare bankruptcy anywhere during the construction phase of the project. You must ensure that your risk is covered in case this happens. Get a solicitor to review the agreement to ensure that you are protected.
Not up to the mark:
What you envision and what you get can differ. This can happen if you are not very good at visualizing what to expect by looking at drawings. Or the developer fails to meet the standards of construction that you were expecting.
Before you sign the agreement
These are some steps that you must take before signing on the dotted line and handing over the check.
· Check out the developer’s reputation; financial position, and history.
· Scrutinize the plans; model, interior finishing, fittings, and fixtures.
· Visit the proposed site area and see if there are any other buildings coming up in the area.
· Research the property market in the area. Get to know current and future property trends of the area.