Top Tips For Off-The-Plan
Sue Irons gives her best tips for buying an off-the-plan investment property.
1 August 2018
New property investors are often intimidated by the process of buying an investment property off-theplan, however, knowledge is a powerful tool. Not only can it help you navigate the purchasing process, it will also help alleviate the apprehension that often comes with trying something new.
An off-the-plan strategy is a great way to buy a property at today’s value, without a huge outlay of cash. Use the following tips as a guideline when purchasing your first (or next) off-theplan property:
- Get a thorough understanding of the market cycle and its ability to grow by considering the six market drivers – infrastructure, yield variation, supply and demand, population, economics and demographics.
- Go after high quality, boutique properties where possible, that will attract a mix of owner occupiers and investors.
- Try to buy in the early stages of a development. This is where you’ll get the best price for the investment property – buy later and you’ll reduce your profits significantly.
- Consider a mix of price points and types of properties, to ensure that you maintain a wider appeal in the marketplace – just in case you decide to sell.
- ALWAYS be prepared to settle after completion, don’t sell half-way through construction and have your financing arranged before entering into the contract.
- We recommend that you purchase an off-the-plan under a 12 to 18-month contract. Since you’ll only have a deposit in the deal and the property value should rise, you should be able to secure a 100% cash-on-cash return.
- Don’t miss out on opportunities because your deposit is tied up in a deal with a long settlement date. Plan ahead and make certain you won’t need your deposit to fund any great opportunities which might come along while you’re waiting for settlement.
- To obtain funding for their projects, developers are required to pre-sell a certain number of properties. This fact can benefit you as a buyer because you can ask for additional and/or better inclusions as part of the process – this will help differentiate your property from others in the development; a difference which just may have a favourable impact on your rental yield. Timing is important. Buy an off-the-plan property in a market which is set for growth, so that while you’re waiting for the 12 to 18 months for settlement, your property can increase in value without you having to cash flow it from your back pocket.
This short checklist only covers a small portion of the things every property investor should know about buying an off-the-plan property.
To find out more about this and other property investment strategies, come along to our next Property Investor Night.
At the event, you’ll get the opportunity to meet with like-minded individuals, pick up great tips and strategies from seasoned property investors who all share your passion for property.
To book to attend one our monthly seminars, go to www.positiverealestate. co.nz/nzpi