The well-documented oversupply of inner city apartments in Melbourne over the next few years looks set to put downward pressure on prices for the foreseeable future.
Despite this, buying off the plan for owner-occupiers and investors remains an attractive option for some given the affordability benefits and smaller deposit that’s often required.
Australian Property Investor have given their set of top ten tips if you are going to go ahead and buy off the plan.
Get finances in order
Use a mortgage broker like us here at Perry Finance to help you organise your finances, pay off debts and work out what your borrowing capacity is so you can get a handle on what your maximum budget is and what properties you can afford.
Understand the market
Especially in the current scenario in Melbourne where there’s an oversupply of apartments and those in construction and planned for construction, you need to research your market.
The things to look for are vacancy rates, rental yields, comparable sales and proposed future developments.
Research the developer
When you’re buying a property that hasn’t been built yet you really are putting a lot of trust in the builder.
That being so you should research your developer to make sure they have a good reputation and past history.
Keep emotions in check
Off the plan buying often attracts first home buyers who are especially inclined to be emotionally charged seeing as it’s their first property purchase.
This rings true for all buyers though, it’s important not to let emotions and excitement cloud your vision and understanding of the facts about an off the plan purchase.
Understand the capital growth, rental yield and vacancy rates of a prospective purchase without letting anything or anyone else influence your decision.
You can find out whether the developer has met their pre-sales target and when construction is expected to start before you buy.
If you do go ahead and purchase, expect further construction delays from factors like the weather.
Weigh the risks
Property is one of the safest investment options available. Buying off the plan does have risks so it’s a good idea to picture how you might deal with them if problems do occur.
Common risks like the property not proceeding, delayed settlement and lower than expected capital growth can be planned for if you are ready for them and have a plan to mitigate them.
Know the buying costs
Have enough savings to cover the deposit, legal fees, stamp duty, borrowing costs and property management fees if required.
Get legal advice
Make sure you get a good lawyer or conveyancer to review your contract before you sign it.
Get a property consultant
Get help and expert advice from a property consultant to guide you through what can be an overwhelming and stressful experience.