Why should I buy "off the plan" property?
Its a good question, why should you buy off the plan property? ‘Buying off the plan’ is a term which you will hear many times as you look for new and exciting opportunities to grow your property portfolio. If you were wondering what this means, it simply refers to the process of signing a contract to purchase a property prior to construction or before the development is completed. When compared to a regular purchase there are several advantages which arise from ‘buying off the plan property’
Firstly, there is an incentive for the developer to give you a discount on the property to encourage a faster sales rate. This is because the faster they are able to secure buyers for a given number of lots, the faster they are able to gain commercial finance and commence construction.
Secondly, as you are securing the property at today’s prices – you enjoy the benefits of the capital growth in the investment over the period of construction without having to pay for it! Most developers only require a 10% deposit, which means you can put your money to work whilst you wait – allowing you to take advantage of other opportunities through further properties or in other asset classes.
There are many benefits in place by the Federal and various state governments which are in place to encourage development of housing across the nation. We see that ‘off the plan” properties give their owners the opportunity to maximise depreciation benefits as they are completely new – allowing you to claim against the building, furniture and fittings amongst others. Furthermore, each state offers different incentives to individuals who purchase properties “off the plan.” For example, NSW offers stamp duty exemption on properties up to the value of $600,000 or less if they are purchased prior to construction – meaning you could save up to $22,490 on duty alone!
Finally, if you purchase off the plan you are able to choose from all the properties within the development. This means you can maximize the growth potential in contrast to other lots within the same development by choosing something with the best location, position, floor layout and views ensuring that your property will always have future buyers lining up waiting to purchase when it finally goes on the market!
Of course there are risks that need to be considered when buying off the plan so make sure you get professional advice and do diligent research on the property or properties.
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