Off the plan property as an investment has many advantages such as the potential for capital growth during the building phase, full depreciation allowances for brand new buildings, higher rental income and lower ongoing maintenance and repair costs once the development is completed.
While it can sound tempting to dive straight into an off the plan property, it’s not just a matter of finding the nearest development and putting your deposit down. When you’re considering purchasing an off the plan residential property investment there are many issues you need to consider before handing over your deposit. These can include looking at a range of different builders and developers, property types and finding contract terms that suit you. One of the questions that investors often ask when it comes to purchasing new or off the plan property is whether it is better to look at larger projects or stick with smaller, boutique-type developments.
The answer to this will largely depend on the individual project, the developer and its location and desirability, but also to financial considerations such as the size of the holding costs and ongoing maintenance fees. In larger projects, for example, the developer will often plan for additional facilities such as swimming pools, gyms and extensive gardens that will require property owners to pay higher annual strata fees to maintain. On the other hand, the presence of these features such as indoor or outdoor pools can often mean the value of the property over time will increase more than other developments. Larger developments with these amenities can be more desirable to tenants and attract a higher rental income as a result.
Smaller, more “boutique” off the plan projects can also be highly desirable, even if they lack the facilities in larger developments. Especially higher-end apartments and townhouses can attract a certain type of tenant who wants exclusivity and is not interested in living in among many people. The fact that an off the plan development only has a few properties in it can make a distinct point of difference that will also help an owner when it comes time to sell. This is particularly important during a downturn in the property market where they may be a glut of apartments on the market. Because you are not paying for the upkeep and repair of facilities such as pools and gyms the annual strata fees are also likely to be lower than in large developments. Don’t forget that developments that are three stories or less do not have to include a lift, reducing the fees even more.
One of the best property investment strategies if you are looking for off the plan real estate is to talk to investment experts such as Ironfish. Ironfish is a market leader when it comes to providing sound and reliable research and support to both first time investors looking to buy their first property and experienced investors who wish to build a sustainable property portfolio. Interestingly many of the Ironfish team were former clients of the company, meaning that they not only benefited greatly from getting help and support from the organisation, they wanted to pass on their knowledge to other investors just like them.