The upside of buying an off-the-plan townhouse or apartment should be competitive pricing that you’ll receive compared with similar properties that have already been built, plus the fact that your property is brand new.
Your biggest challenge is to commit to a purchase based on a scale model, artist’s impressions and floor plan rather than be able to make a physical inspection. So, you’ll need to use your imagination to really picture whether it’s the property for you.
Another key difference is the transaction itself. Typically, you’ll pay a 10% deposit to reserve your purchase and then wait for construction to finish.
Be aware that lenders will not issue a mortgage until construction is finished, so you’ll need some cold hard cash for the deposit.
Here’s a quick outline of how you should buy “off-the-plan”:
Set Your Budget – Talk to your bank or a mortgage broker to find out the size of the loan that would be possible for the property once construction is finished.
Decide the style of property – Focus on the location and quality of apartment you can afford. Criteria to consider:
- Location and views
- Large or small development
- Ground floor or higher level with balcony
- Favoured floor plan, such as large living area
- Number of bedrooms and bathrooms including ensuites
- Available facilities, such as a pool, gym and parking.
Shop around – Visit the sales offices of developments either in the process of being built, or those where construction has not yet started.
Do your Research – Once you’ve found a development, do due diligence on the developer, builder and architect. Find out what else they have worked on, and reassure yourself of the quality of their work.
Is the DA Approved? – Don’t assume anything. Make sure a project has Development Application approval. Be aware that some prospective developments, even those with DA approval, may never go ahead.
Investment potential – Usually, you’re going to get good value. However, you should find out if there are similar projects within a 5km radius. Oversupply of a local market can affect your property’s value in the short to medium-term.
If you’re in the market for an apartment, come by our office and we’ll be happy to discuss your options. We’d certainly take you right through the buying process of an off-the-plan apartment, as well as present similar opportunities where the property has already been constructed.