There is plenty of potential upside to this type of property investment. But it is not one we would recommend without first going through our EARN process.
Many of our clients have an interest in using property to improve their financial positions but simply don’t know where to start. Our evidence-based system informs and educates our clients on what service providers are in the market place, ensuring they get the best independent advice possible.
Four step process
We’ve developed a clear and practical four step process that we call EARN. It provides the information and the insights to help you on the path to both debt reduction and wealth creation.
The 4 steps are:
Astute buying “off the plan” has helped many of our clients build a real estate investment portfolio. But it is not for the impulsive, the financially illiterate or the uninitiated. Active Consulting informs our clients of all the opportunities and the pitfalls in this type of investment, so they can make an educated decision relative to their own financial circumstances.
Buying “off the plan” explained
This is when you contract to buy an apartment that is yet to be built. As such, much of your decision is based on a developer’s plans and computer rendered impressions of how the apartment will look.
You agree on a purchase price and usually only need a small deposit. In theory, property prices generally increase while the developer builds the apartment.
But that’s not the only advantage.
Stamp duty discounts
You could save on stamp duty, as most states offer discounts on newly constructed properties and, if a buyer signs a contract before construction begins, stamp duty will only apply to the land value, not the finished product(i).
It buys you time
You’ll generally only need a 10% deposit and can use the extended construction time to save up the outstanding balance or use the money for other investment purposes.
As an investor, if you plan to lease out the apartment, buying a brand new property “off the plan” allows you to maximise the tax deductions available to you via depreciation.*
What are the risks?
Without expert guidance a buyer could agree to pay more for a property than it is worth. Buying in the right Hotspot areas where you have information about supply and demand can alleviate this risk.
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You should assess whether the information on this website is appropriate to your particular investment objectives, financial situation and investment needs. You should do this before making an investment decision on the basis of the information on this website. You can either make this assessment yourself or seek the assistance of any adviser.