Although purchasing a property off the plan (OTP) can be a sound way to invest, there are 10 key things that can greatly optimize the profitability of your investment.
Key No 1 : Finding Value
Be smart and get an independent valuation of the property before buying. Check data from companies like Australian Property Monitors, RP Data and SQM Research.
Key No 2 : What to Look For
Study key factors that determine the value of property such as location, bedroom size, balconies, parking, natural light, storage and use of spaces. Know how the vicinity will be developed in the near future.
Key No 3 : Research
Research before you buy. Be prepared for opportunities and threats that are outside your control.
Key No 4 : Seek Advice
Seek legal advice on the contract. There may be details in the contract that can work against you in the event circumstances change or if there are delays.
Key No 5 : Settlement Risk
There is usually a gap between the buying and the settlement of an OTP property. During this time circumstances may change that may adversely impact the settlement conditions such as valuation. Investors need to be aware of this and prepare to meet any resource shortfall should it occur.
Key No 6 : Approval of finance
Never buy a property impulsively unless you have organized the necessary finance. Never over leverage and learn how different loans work and what’s the best one for you.
Key No 7 : Settling Up
Always negotiate a reasonable timeframe for settlement before you commit to the purchase. Penalty payments apply if you are unable to settle within the time set.
Key No 8 : Credit History
Limiting the number of times you apply for finance helps your credit history. Keeping a positive cash flow and paying your bills on time helps too.
Key No 9 : Space and Inclusions
Scrutinize the marketing collateral and ensure that you cover all the details. Pay attention to the scale and integrity of the spaces represented.
Key No 10 : Savings
Buying OTP benefits investors by way of a large stamp-duty saving. Remember to check ‘indicative’ depreciation schedule to get further deductions for building and fixtures.