Buying off the plan

Chances are you have heard us here at Grow Consulting, or perhaps other investors and professionals in the property investment industry, mention off-the-plan investments lately, and there is a good reason for this.

Buying off the plan allows you to buy a property for the future at today's prices. To put it simply, it is buying a property before construction has commenced, and the buyer purchases on the basis of developer's floor plans and existing site.

In addition to capital growth, other advantages of this type of acquisition include:

• Stamp duty savings - because you are paying the stamp duty based on the cost of property at time of purchase, rather than value at settlement
• Lock in today's price for the property
• Delayed settlement gives you more time to save further deposits
• Significant tax savings - as the property will be brand new and never lived in, the depreciation on it is higher
• Building warranty - you will be provided with all building and appliance warranties
• Time to sell your property - allows you more time to sell the property at a profit between signing contract and settlement (if you choose to sell on settlement, rather than renting it out).

Purchasing an off the plan project at pre-public release stages can offer further discounted prices or incentives to the buyer making this type of purchase even more favourable. To give you an idea, we currently have access to a Newstead development, featuring one bedroom apartments from just $386,000 and two bed apartments with city and water views from $537,000.

Investors only need to come up with the 10% deposit, and full payment is required on completion. A mortgage is only required to be taken out at settlement (on completion).

Some investors are afraid that they could lose their deposit during the time of construction. This is inaccurate. The worst that can happen if construction of the development does not go ahead as planned due to the developer going bankrupt or for another reason, you won't lose your 10% deposit - it is returned in full, because it is held safely in the developer's solicitors' trust account and you will be released from your obligations under the contract.
If you would like more information on how an off the plan purchase could find into your strategy please contact grow consulting.