Like many developers, the team at Pulse Property is keen to offer our new homes and apartments for sale when the project is under construction. This places us in the buying off-the-plan market, but for many prospective homeowners, the thought of investing this way can be quite daunting. After all, there is nothing to see, touch or feel, other than a set of house plans. And there are plenty of naysayers ready to share their stories about the pitfalls of buying a property with an inadequate floor plan in a noisy location!
But what of the savvy investors, the ones who see immediate value in securing a brand new home off-the-plan and reaping the typical benefits that follow? Beyond their due diligence strategies, what other pertinent factors often attract these buyers?
1. Price incentive. It is common for developers to set competitive prices when they first offer homes off-the-plan to the market. As construction moves towards completion, factors such as capital growth and expected improvement in rental yields often result in a higher selling price to that which was offered in the first instance.
2. Better choice. Off-the-plan buyers are quick to take advantage of all the options available to them. Securing the unit best suited to their needs can have immediate appeal to the home owner or investor and can result in better rental returns.
3. Tax benefits. If you are buying a property off-the-plan for investment purposes, then the tax depreciation benefits available are higher because the property is brand new. Your tax accountant should be able to highlight the benefits to you in a brief consultation.
4. Buying at today’s prices. Home buyers typically pay a deposit to secure a home at today’s market rate and don’t have to settle until the home is completed, often up to 12 months down the track, sometimes longer. Capital appreciation is an added benefit if you find yourself in a rising market. Of course, there is always risk involved in buying off-the-plan if the market falls, although this is rarely the case in Australia and most investors and home owners purchase with a long term strategy in mind.
5. The luxury of time. If you intend to live in the home, then you have time to plan your activities well ahead of the move in date. This reduces the stress and frustration of having to coordinate the sale of an existing home under pressure; giving you valuable time to execute a smooth move.
6. Money in the bank. When you purchase a home in the early stages of planning or construction, you have the opportunity to take advantage of building your nest egg to help with relocation costs and mortgage reduction. Although you will pay the deposit when you sign the contract, the remainder of funds are generally not required until handover – allowing you plenty of time to put a savings plan in place.
We hope you have enjoyed hearing about some of the reasons why many investors are quick to buy off-the-plan. Of course, it’s not for everyone, but it’s worth considering the advantages and understanding why some are keen to follow this strategy.