Have you been considering downsizing or investing in an off the plan apartment… but your plans fall short because of too many unknowns that have gone un-answered?
What’s the process of buying off the plan?
Is my deposit secure?
Am I at risk when I buy off the plan?
Will there be capital growth by the time I move in?
Can I purchase an apartment before selling my own home?
What if I change my mind?
Whether you’re looking to free up more of your time from the hassles of maintaining a larger home or you’re looking for an ideal lock and leave investment opportunity, buying off the plan can be a very smart tactic if you time your purchase right.
So, if you’ve found yourself mulling over the pros and cons of buying or investing in a brand new apartment, we’ve outlined the key considerations that go hand in hand with buying off the plan to help you decide if it’s right for your circumstances and property goals.
What’s the process to buy off the plan?
When you buy off the plan, it means you’re buying something that hasn’t been built yet. Without a physical property to inspect, this means your buying decisions are based on plans, renders, and feature & facility information provided by the developer.
This type of purchase means putting down a deposit and then nothing more to pay until settlement, which is at the completion of the building.
The process in overview would look like this:
1. Booking an appointment with the Project Sales Manager
This gives you an opportunity to talk about your needs and wants, review the plans and specifications in finer detail, and evaluate whether buying off the plan would suit your circumstances. At Abel Projects WA, we take all potential buyers through a free consultation where we answer specific questions surrounding their buying decisions, the project and finance.
2. Finance approval
During your initial appointment with the project sales manager, you will typically go through the processes of finding out your lending capacity to obtain finance approval. In most cases, off the plan projects will have a finance team that potential buyers can access and utilise. You can also organise your own financial assessment with an external broker or bank to assist with your financial approvals and applications. In most cases, people who utilise their own finance broker will often seek finance approval before engaging with a project sales manager to pre-determine their affordability.
Most off the plan projects offer a fixed selection of floorplans and finishes which means that likely you won’t get to make any custom changes. This process would typically involve selecting your preferred apartment layout from the fixed floor plan types. For example, with Paradiso we have a selection of floor plans standard to the 1, 2 and 3 bed apartment types that potential buyers can choose from.
Once you’ve decided on your desired number of bedrooms and layout, you are then given the choice of what colour scheme you might prefer for your apartment – if you get in early enough. The choice of colour scheme would include typically include; flooring, tiles, and cabinetry. Once construction commences and progresses on a project, colour schemes will need to be made by the project team for apartments that haven’t been secured.
Remember the earlier you get in the more choice you’ll have in choosing an apartment that fits your criteria.
4. Changeover costs
If you’re downsizing or upgrading, during the decision and buying process you will also need to consider your changeover costs. In many cases, if you’re relocating from one home to another you will need to sell your existing property first which can be a lengthy process. If you’re in this situation, talk to the project sales manager about it because in many cases they can provide vital support to assist with your changeover. The team here at Abel Projects offer a Paradise Bundle for new owners to help support the hassles that surround the changeover and moving costs.
5. Reserving your apartment
Once you’ve received finance approval and you’ve settled on your desired apartment the project sales team will take you through the process of reserving your apartment and finalising contracts. Generally, you will go through a process of paying a reservation fee which is typically refundable until the exchange of contracts. The reservation fee ensures that the apartment is held for you to prevent any other potential buyer from reserving it.
This part of the process would be where you discuss the agreements of the contract and pay your deposit to secure your selected apartment with the balance of the full purchase prices due on settlement when the building is complete – this deposit will be non-refundable. As with any contact, it’s always important to understand what you are signing before you sign. Be sure to go through this thoroughly with your project sales manager and seek independent legal advice.
What are the advantages of buying off the plan?
More breathing space for your finances
One of the advantages of buying off the plan is that you settle on a purchase price before the building is complete and as mentioned above, you only need to put down your deposit and pay nothing more until completion. In essence you are controlling that purchase with a small amount of money until settlement. This also allows you more breathing space to get your finances in order before settling on your new apartment. If this is your first time on the property ladder or you’re looking to sell and buy new, you’ll find this a massive financial advantage!
Timing is everything!
Whether you are buying to live in or as an investment, you could see some capital growth by the time you move in – but only if you purchase at the right time. What this can mean is that if you purchase at the low point in the property cycle (like where Perth is at now) you are buying in at the right price and it means you could possibly have some increase in value by the time settlement comes around. That could be a nice added bonus. This could also go in reverse if you buy at the completely wrong time in the market, so this is an important consideration when buying something that hasn’t been built yet.
Enjoy a brand-new property
Moving into an apartment you buy off the plan means you’re the first to live in the space. Everything from your amenities, fittings, fixtures and included appliances are all brand new which means absolutely zero maintenance.
You’ll also save money on not having to redecorate any time soon – everything will be just the way you want it down to the colour schemes.
As an added benefit, if you are the original owner of all fixtures and fittings it means that you’re able to depreciate all of these items, which for an investor, is a substantial income windfall in the first 5 years or so of owning the property. Everything you spend on a brand new apartment generates income i.e. there’s no wasted funds on land that does not generate cash flow for you.
A brand new apartment offers lock and leave convenience. For a downsizer this frees up your time and money from maintaining a bigger home to spend on the things that matter most to you and as an investor, you get a seamless set and forget property that fits the bill as “investment worthy”.
Reduced power bills
Recent changes to the Australian building code ensure all new properties meet energy efficiency requirements which means you save on gas, electricity and water bills.
Paradiso goes one step further with a 6 Star Green Rating meaning tenants will not only save on utility bills they’re also contributing to a sustainable energy solution.
Huge incentives up for grabs
Many developments offer great incentives to buy or invest which can help to reduce the financial pressure of buying. At Paradiso we’re offering two bundles for Investors and Buyers that have been designed to help with changeover costs, living expenses, deposits, rental returns and more. For more information on our bundle packs take a look via the links below:
Am I at risk when I buy off the plan?
As you may have already guessed, with all the benefits of buying off the plan, there are some risks to it with the main being you could pay more for what the apartment is worth by the time it is complete, or you could risk losing your deposit should you decide to change your mind.
It’s important to understand all sides of the equation before you decide on if buying off the plan is right for you.
Thankfully, the team here at Abel Projects WA specialises in off the plan projects which means we stay ahead of the trends to understand the apartment market and the Perth property market to ensure the risks are minimised. We carry out extensive feasibility on our all of our projects working with only the best developers in Perth to ensure you can rest easy.
An we’re excited to announce that Paradiso is now officially under construction! So if you’ve been thinking about making Paradiso your new home or investment, you can also rest easy knowing that Paradiso could be in your new address in 2021.
For more information in relation to the Paradiso Como timeline and property team at Abel Projects contact us today.
Do you know a broker who can help me unlock what I could borrow?
Yes, the team at Paradiso has a fantastic team of in-house finance brokers who can help you better navigate your finances and unlock your borrowing potential.
Our team can help you access a complete range of property-associated loans, sourcing the most competitive options from lenders across Australia. Every member of our team has their own Australian Credit Licence – reflecting their high level of industry-specific training and experience.
For more information in relation to financing your apartment purchase contact us today.