The question of whether investors should focus on off the plan apartments or established properties is a common one for people thinking about how to buy an investment property. There is no doubt, the financial incentives for off the plan and brand new properties can be appealing, but there are other reasons first time investors should leave established properties to owner occupiers. Let’s look at the main reasons off the plan properties are a sensible long term investment choice.
One of the most enticing aspects about buying an off the plan property is the generous tax concessions and stamp (or transfer) duty exemptions. Off the plan buyers, for example, may be eligible for a 50% capital gains tax discount, as well as reduced stamp duty for first home buyers. Every state has different rules and regulations surrounding stamp duty on property. In NSW, for example, people looking at off the plan property may be eligible for a grant of $5,000 as long as the property value does not exceed $650,000.
The other financial incentive for people thinking about how to buy an investment property is that off the plan apartments generally require only a low initial deposit. Essentially when you find an off the plan apartment you are happy with, you generally only have to pay a 10% (or sometimes lower) deposit to secure your claim over the property until it is completed.
The time between securing the property and the moment you are required to settle for the full amount on its completion can be several years. This gives you the advantage of having time to get your finances in order, unlike an established house or apartment, where you will be required to organise a mortgage before you even choose a property. This time can also be advantageous as it gives you breathing space to think about your rental strategy, choose suitable agents and get to grips with your responsibilities as a future landlord.
Finally, one of the overlooked aspects of looking at off the plan property as opposed to established properties is that it gives you the ability to be picky. Imagine being able to go into a suburb and choose the best property – the one with the best layout, outlook and features. This is exactly what you can do with off the plan developments. Looking for an apartment near the back of the block with a balcony and a quiet outlook that might suit retirees or older professionals? Or thinking of a large apartment at the front of the development, close to the amenities such as a pool or entertaining terrace that would suit young professionals? With an off the plan property, you can be in the box seat when it comes to choosing the right apartment that suits your strategic investment plan.
Don’t forget to seek assistance from professionals when thinking about how to buy an investment property. Companies such as Ironfish will be able to help you find good investment opportunities while making sure you are getting all the advantages of off the plan property investment.