Real Estate today is volatile. The financial crisis has impacted buyers and sellers, there’s no doubt about it. One avenue some people choose to explore is that of buying property off the plan.
So what does off the plan mean? Basically, when you buy off the plan, you are buying the property before it has been built. This is a very attractive method of purchasing apartments, in particular, because there is often a good deal of money to be saved. Developers often market their properties this way because it provides the funds necessary to do the construction. Also, many banks won’t loan money to developers without at least 70% of the available units pre-sold.
Everyone wants a good deal so how this becomes a good deal for the apartment buyer is that the purchase is often discounted. Assuming the property market is stable or grows, this often means that the value of your off the plan apartment is worth more at completion than you paid for it. You have to admit, this is a good thing. Also, you usually get some say as to the fittings like the bathroom floor tiles and can speak to the kitchen designers in Melbourne to discuss colours which you wouldn’t have if you waited to make the purchase after the building was completed.
On the downside is that the actual construction can take a few years to complete depending on the size of the project. It’s also possible that the market value of your apartment could even go down. But, again, the upside is that you are buying at a cheaper price than you normally would and you also have several years to continue saving for the day your beautiful, luxury apartment is finished and the closing process begins.
Apartments are usually a better investment when buying off the plan. And, if the apartment you buy is on the water, or has a water view, they traditionally maintain very good value.
There are always risks when buying real estate and this is no different. Even if you bought a house today, there is no guarantee that it will hold its value or increase in value in the coming years. Historically, it will improve but that is not a guarantee.
Off the plan, property has a lot to offer and the benefits can outweigh the risks but that is for you to decide. Have your solicitor review any contracts before you sign anything. Off the plan, apartments are a great way to leverage yourself into the Real Estate market. Investigate your options and then make your move.