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Everything you need to know about buying off plan – Part 2: Finding the right property
This is the second part of our 3 part series which answers common question about buying a new property off the plan, specifically in townhouse or apartment projects. Last time we covered the major benefits of buying off plan. Today we’ll focus on strategies you can use to find the right property.
Your personal circumstances will always determine your priorities so your approach could vary based on what you need to achieve as part of your purchase. Whether you are planning on living in the property or renting it out as an investment, the important fundamentals need to be considered to ensure you’re happy with the end result.
Let’s start with finding the right property for you.
While the following guidelines apply to pretty much any property purchase, they are particularly important if you are going to live in your off plan townhouse or apartment. If you’ve decided to buy your own home, whether it’s going to be your first property purchase, or you want to upgrade or downsize into a new property, there are a number of important considerations you should make.
- How much should you spend?
To determine this, you need to have a good understanding of your financial position and your borrowing capacity. While you may need to make certain sacrifices, it’s important not too stretch yourself too far. Going without that shiny new Aston Martin you’ve had your eye on it is fine, but forcing yourself into a situation where you can only afford to eat every second day is not. You need to find a happy balance. That means figuring out an amount you can afford that will still allow you to live comfortably.
The best way to do this is by concentrating on what your monthly home loan repayments will be, rather than focussing too much on the overall figure. Speaking with a mortgage broker or your real estate agent can help with this step. Once you know how much you can afford to spend, it will make finding a suitable property much easier.
As we discussed in Part 1, a significant advantage of purchasing off plan can be the additional time you have to save a larger deposit during the construction period. This increases your potential purchasing power while allowing you to buy at today’s prices.
- What do you need in a home?
The next thing you need to do is figure out what you want in your new home. At the same time, you need to be realistic about what you are looking for based on your budget and separate essential features from features you would just like to have.
For example, if you are planning on starting a family, then you probably realise you are going to need a bit of extra living space, so there probably isn’t much point looking at 1 bedroom apartments. If you are sharing the home with someone and you both need cars to get to work, then you will need to look at homes that offer multiple parking spaces. Having said that, most projects are located in areas with plenty of employment, lifestyle amenities and public transport, the savings you can make by not requiring an additional vehicle can be a major benefit.
Additionally, bathroom configurations, kitchen designs and outdoor areas often vary, not only from project to project, but also within the same development and the potential choice and variety are another strength of an off plan purchase allowing you to get more of what you need.
- Where do you want to live?
When it comes to choosing a location, what you are really looking at is lifestyle. How close will your new home be to work, shops, restaurants and entertainment options? What kind of views will you have? Is there easy access to public transport? These are all important considerations.
Depending on your circumstances though, you might need to compromise slightly on your ideal location. You might not be able to afford an apartment or townhouse right in the heart of the city centre, but living just one suburb over will still offer many of the same lifestyle benefits and may well be within your budget.
Generally an off the plan purchase to live in will be driven by location over land size and this is something you will need to determine for yourself what is most important. Established infrastructure is often cited as a leading reason to purchase in a project of this nature.
- Who is building it?
Another important thing to consider is the quality of the home you are buying. For this reason, it is a good idea to look at off plan properties being built by reputable developers with a solid track record.
Find out how long the developer has been in the industry and how many properties they have successfully completed. If you can, try to visit some of those properties. That should give you a good indication of the level of quality you can expect.
Now let’s look some strategies for finding a strong off plan investment property.
Most of the previous points will still apply when you are looking for a new investment property, but there are a number of additional factors you should consider.
- Do your research
What is it worth? We are all looking for value in any purchase and provided it is affordable, price will not always be the determining factor. What unique features are on offer? Does it meet demand that is not currently catered for? How does it compare to other alternatives in the market now?
- Ask yourself: “How easy will it be to sell this property?”
We are not recommending you purchase real estate speculatively. Sure, some people have made money by purchasing off the plan and re-selling pre-settlement, but the rule of thumb is that those who have created real wealth through property investment tend to buy and hold on to their properties. The reason this question is so important though is that it is a relatively safe assumption that if a property is attractive to the sales market it will be equally attractive as a rental proposition and assuming you are seeking ongoing capital growth it is therefore likely to hold its value at or ahead of the market over the medium term.
- Be ready to act fast
The best apartments and townhouses are usually the first to go. Buyers are quick to snap up the apartments with the best views. If you can get in early, you’ll have the best chance of securing one of the better properties.
You might also find that getting in first can save you some money. Developers usually need to make a certain number of sales to cover their financial requirements before construction commences. This can mean the lowest priced apartments released to the market first, in order to secure those early sales.
The above strategies should help you to find the right property for you. Make sure you check out the final instalment of our buying off plan series, where we will walk you through the purchasing experience and process.
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