4 Serious Issues to Consider and Understand with Investment Property Off the Plan

When things go really wrong with property investment off the plan, they tend to go very wrong. By looking at some of the typical disasters that arise when something does go wrong, we can make the right decisions at the right time with this type of investment property. We have all heard of horror and windfall stories related to investment property off the plan. Which of the properties go south and why, can often be very hard to predict and understand, particularly in the case of those who listen to too much hype and marketing, or those who do not understand the dangers. There are some critical factors that cause the same problems to arise with investment property off the plan. This article looks at the common problems and why they occur.
  • Discount for Uncertainty. When you are buying off the plan, you are buying a promise or an agreement. It is important to understand that agreement and make sure you have recourse if anything is not the case. The details and conditions of your contract must be checked by someone who has experience. There have been a number of cases where the finishing’s of an apartment complex have not met the expectations of the buyers. You are also risking lending your deposit for a given period of time in the case where the building is not finished, or waiting longer instead of terminating the agreement if the developer does not meet the completion time.
  • Risk with Financing. Property off the plan is really suited to people who have their own money to make a settlement, or other options they can fund themselves. If you are buying off the plan with finance, there can be considerable time between when you make the deposit and when you actually need the finance to pay the settlement. It does not take long for sudden changes to change the confidence in the banks, and finding yourself without the ability to make the settlement means you will lose your deposit.
  • Flipping. Flipping off the plan investment property has always been very popular. It was so popular that it was getting out of control. This is the case in just about every market. It has been a number of years since the introduction of laws that have put control and constraint on the time frame between purchase and sale. There are still those who find creative ways to get around this. When the complex comes to completion, there will be those who even risk selling their apartment without getting the finance to buy it. This can mean a huge drop in the current price on the market if a lot of people are trying to do that. We can never tell how many other apartment owners have this intention. Essentially they are gambling with their deposit, and it will influence the value of our property, and if we are getting finance, a drop in value can influence our finance, which might be higher than the market value at time of settlement.
  • Total Number in Whole Market. It is very important to look well beyond a single complex or development when you are buying off the plan. If there are a huge number of other projects completing at the same time as your, even far away in another city and state, the values across the market will be greatly influenced at that time. You should know exactly how many other off the plan projects are underway, or will be soon underway, and how long until they all reach completion, when you are considering purchase.
With good research, good advice, and all the information on the whole market, off the plan investment property can be very beneficial, if made at the right time. Sometimes, we just have to wait a few years until the market is right.

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