The dos and don'ts of buying off-the-plan

Buying off-the-plan has some great advantages such as locking in a price to safeguard against rising property values, as well as having a number of tax advantages like claiming depreciation on fittings and fixtures.

Off-the-plan properties may just be the solution for investors who need to organise their finances or first home-buyers who currently do not have enough capacity to purchase.

However, there is still some confusion from buyers, who still have to follow some steps to make sure that they are getting the most out of their investment. It is important for home buyers and investors alike to perform their due diligence and understand where and why most mistakes happen.
 
DO’s
1.       Research, Research, Research
You can never underestimate the value of conducting your own research. Look for:  
a) Suburbs that provide you with the best growth & that provide you with the best yield.
b) Price you expect to pay in those suburbs.
c) The apartment types that provide you with the best growth and the best yield. For example, in some inner city suburbs, capital growth on a two bedroom far exceeds other apartment types, although one-bedroom apartments generate the best yields.
 
2.       Register on Project agencies’ databases  
It never ceases to amaze me the number of people who say they want to buy and then complain when they miss out, simply because they don’t want to provide their details to the project agents or even better they don’t supply their phone number! Understand that the sales people will always contact the potential buyers who are easiest to contact and the most responsive. Further, people who register with project marketers’ databases often get the first opportunity to see the project.
 
3.       Act decisively   
Usually the first third of the project is sold not only to members of agencies databases but to those members who act quickly. Given that you have done your research, you should be able to make your purchase decision with little difficulty.
Note: In most projects, prices are increased after the first third of the project is sold. Smart buyers want to be amongst the first half of the purchasers because if they are not, they are in effect paying more for the same property.
 
4.       Understand the Value of time  
Generally, property prices in Sydney increase annually by between 5%?7%, but occasionally there may be a dip in values. Don’t panic: over time, your investment will serve you well. And with the strong performance that our property market is seeing at the moment, you can feel confident.
 
5.       Buy in the areas people want to live
People want to live in areas because of the benefits that are associated with that area. A recent study showed that the top 3 priorities people have for choosing somewhere to live are proximity to schools, work and transport. Some other things to consider are shopping, parks, cafes, restaurants, water and the size of the property.
 
DON’Ts
1.       Don’t buy without knowing who the key people in the project are.
It is always important to know the profiles and previous projects of the developers, the architects, the interior decorators and the project manager.
 
2.       Don’t buy without having your solicitor look at the contact.
It is important to choose a solicitor who understands off the plan contacts. An experienced solicitor is worth their weight in gold. The wrong solicitor could COST you their weight in gold.
 
3.       Don’t expect the agent or developer to wait for you to get your finance organised.
Most banks will not give you an approval more than 6 months before completion anyway. Get an indication from your bank that you will be OK then go for it.
 
4.       Don’t treat the agent with disrespect.
The more they like you, the more likely you are to get in early and grab the apartment of your dreams or a great investment.
 
5.       Don’t forget the reason you are buying; either a great new home or a solid investment.
Never confuse the two reasons.

About Sam Elbanna

Sam Elbanna is the founder and managing director of CPM Realty and is regarded in the industry as one of Sydney’s leading project marketers.

With 18 years of experience in property development around Sydney, he has a keen understanding of property markets, developments and investing in Sydney. He has been instrumental in the sales of a number of development sites ranging from small suburban residential development sites in the suburbs, to larger multi-storey office buildings and development sites in and around the Sydney central business district.