Investing in property has always been a reliable way to build wealth and buying property 'off the plan' is an increasingly popular strategy among savvy investors. This approach not only provides flexibility but also allows you to secure today’s pricing while benefiting from potential future growth in property value. If you're considering this investment method, here's why buying off the plan could maximize your returns.
What is Buying 'Off the Plan'?
When you buy 'off the plan,' you're purchasing a property that hasn’t been built yet. Instead of walking through a physical property, you rely on detailed floor plans, architectural designs, images, and renders. After you agree to purchase, the purchase price is locked in and you pay a deposit, typically around 10%. Settlement occurs only after the property is completed, which could take anywhere from 6 to 12 months, depending on the project timeline.
The Advantage of Locking in Today's Prices
One of the most compelling reasons to buy off the plan is the ability to lock in today’s property prices. In a rising market, this can be a game-changer. By securing your property at its current value, you’re effectively buying at a discount if the market appreciates by the time the property is completed and ready for settlement.
For example, imagine purchasing an off-the-plan property for $700,000 today. Over the next 12 months, the local property market sees a 5% rise in values. By the time you settle, your property could be worth $735,000, giving you an instant $35,000 in equity before you've even moved in or rented it out. This automatic upswing in value is one of the main reasons investors are drawn to off-the-plan opportunities.
Flexible Settlement Periods
Buying off the plan also allows for a delayed settlement, giving you time to prepare financially. Depending on the development timeline, you may have 3, 6 or even 12 months before settlement is due. This flexibility enables you to organize your finances, save more for the remaining balance, or even pay down existing debts.
For investors, this extended period can be particularly beneficial. It allows you to plan your investment strategy, secure favourable financing options, and monitor the market for further trends. If the property appreciates during this time, you gain additional value at no extra cost.
Potential for High Returns
One of the biggest draws of buying off the plan is the potential for high returns on investment. In addition to securing a property at today’s prices, many developers offer incentives such as rental guarantees, or free upgrades to entice buyers. Combined with
market growth, these perks can significantly boost the financial return on your investment.
Moreover, brand-new properties often attract higher rental yields compared to older homes, thanks to modern designs, energy-efficient features, and lower maintenance costs. This makes off-the-plan purchases particularly appealing for investors looking to generate a steady rental income.
Risks to Consider
While buying off the plan offers many benefits, it’s not without risks. Property markets can fluctuate, and there’s always the chance that prices may stagnate or even decline during the construction period. To mitigate these risks, it’s essential to research the developer’s track record, understand the contract’s terms, and seek professional advice before committing.
Final Thoughts
Buying off the plan can be a smart investment strategy for those looking to secure a property at today’s prices and benefit from potential market growth. With the added advantage of flexible settlement periods, this approach offers both financial and practical benefits. However, as with any investment, it’s crucial to do your due diligence and consider both the opportunities and risks involved.
If you’re ready to take the leap, buying off the plan could be your pathway to long-term wealth and property success. Reach out to the team at equiti today.