Why you should do some homework before buying off the plan project

For some reasons, buying a house or unit that does not yet exist can be intimidating. It is getting normal to inspect goods before we buy so we know exactly what we’re getting as consumers. To see is to believe. Simple.

Apparently, a golden rule in real estate is that it is a long-term investment and not speculative. Therefore, if you plan to hold your property for at least a decade to give yourself the best chance for good capital growth. It could be seeing that benefits to buying off-the-plan can include lower prices than established properties but not always. In some customisation of floor plans and finishes could be available, only paying 10 per cent deposit until after the project is complete.

However, while there are many potential benefits, off-the-plan purchases also come with risks. There, here are some tips to consider if you are intending to purchase an off-the-plan which will help you make a more informed decision.
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• Research the market – Example, The REIQ publishes a quarterly report that gives you the median price movements of established houses and apartments in most Queensland markets, comparing prices over the quarter, over the past 12 months and over the past five years.

• Background check - What other projects has your developer done? Have there been any failures? Check the builder’s references and work history, including any licence details, builders’ warranty, insurance and compliance certificates. Who is the financier of the project and what is their project history?

 

• Check first - In certain markets there is some settlement risk. The property’s value may fall between the time you paid your deposit and the time it comes to settlement and this may impact on the lender’s decision to approve the loan.

 

• Rental guarantee - There’s no such thing as a free lunch and any developer who offers a rental guarantee has built this into the price.