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[On-Demand Webinar] The Pro's and Con's of Buying off the Plan
- 1. The Pro’s and Con’s of Buying Off the Plan
- 2. Maximise audio quality • Please ensure your speakers are on, volume is up and not on mute. • You can test your audio in the control panel of the Go To Meeting software, under audio preferences. • If you can’t hear us yet, please ensure your speakers are on and turned up. • TURN OFF: Outlook, Skype, online back-ups and any music or video downloads. • Faster internet = better quality audio.
- 3. Dennis Wong • Product & Training Manager. • Property investor for the past 10 years. • Great amount of industry experience.
- 4. Material contained in this presentation is an overview only. It should not be considered as a comprehensive statement on any matter nor relied upon as such. This presentation contains general information only and does not take into account your personal objectives, financial situation or needs and you should consider whether the information is appropriate to you before acting on it. Before acting on any information you should consider seeking advice from a financial adviser and your accountant before making any financial decision in relation to any matters discussed in this presentation. General advice disclaimer
- 5. We help investors build and manage their property portfolios
- 6. • Guided and mentored thousands of clients to plan and purchase property since 2006 • Helped clients build wealth through properties • Provides superior real estate information • Assisted clients reduce debt and retire early • Over 260,000 members Real Estate Investar
- 7. ASX listed, data and research based company providing industry-leading: • Online property investment software • Strategy and advisory services • Invested heavily to be data driven • Operate according to strict public governance Real Estate Investar
- 9. Poll: When are you purchasing your next property?
- 10. Poll: Have you considered off-the-plan property?
- 11. What is Off-the-Plan Property? A property that is available for sale before construction begins. • Apartments, townhouses & houses. • Different to House & Land.
- 12. Off-the-Plan Vs House & Land Off-the Plan • 1 contract that includes both the house & land components. • You become the owner at the end of the construction process & settle in a single day. House & Land • 2 contracts – 1 for the land & 1 for the house. • Buy & settle on the land first; loan is taken out on the land only. • 2nd loan is then taken out (construction loan) & builder is engaged to build the home. Payments are made in stages as the build progresses. • You own the land at the beginning of the process.
- 13. Off-the-Plan Vs House & Land House & Land – Full turn key Some builders may not include everything you would expect. • Vertical blinds • Ceiling Fans • Driveway • Shelving • Eaves • Mirrors • Fencing • Clothesline • Tiles & Carpet • Landscaping • Letterbox • Vanities, tapware & toilet suites • Bathroom exhaust fans • Air-conditioners • Light fixtures • Security screens
- 14. Pro’s of Buying Off-the-Plan • Low Initial Capital Outlay (10% deposit) • Brand New • Lower Maintenance Costs • Buying at today’s prices • Build equity without incurring any loan payments • Warranties
- 15. Pro’s of Buying Off-the-Plan • Modern Living • More attractive to tenants • Customisation may be available • Depreciation • Government Incentives • First Home Owners Grant • Stamp Duty Concessions
- 16. Pro’s of Buying Off-the-Plan Government Incentives • QLD • $15,000 or $20,000 grant for first home owners (value less than $750,000). • NSW • $10,000 grant for building new home up to $750,000 & buying new home up to $600,000. • Stamp Duty abolished on all homes up to $650,000; stamp duty relief for homes up to $800,000 for first home buyers.
- 17. Con’s of Buying Off-the-Plan • Can’t see the end product • Additional fees for extras (driveways, landscaping, fencing etc.) • Sunset Clauses / Delays • Developer goes bankrupt • Higher Strata Fees
- 18. Con’s of Buying Off-the-Plan • Increasing Interest Rates • Financing • No Uniqueness / Individuality • Property / Market Value Decreases
- 19. Where to buy? • Close to jobs, transport, cafes, schools, universities, entertainment etc. • Increasing populations. • Low vacancy rates. • Limited supply of land. • Is it too close to a major road, highway or train track? • Is it too close to industrial properties?
- 20. Where to buy?
- 21. Where to buy?
- 22. Where to buy?
- 23. Infrastructure – Local Council
- 24. Infrastructure – State Government http://www.statedevelopment.qld.gov.au
- 25. Infrastructure – State Government http://www.planning.vic.gov.au
- 26. Infrastructure – Federal Government http://infrastructureaustralia.gov.au
- 27. Infrastructure – Federal Government
- 28. Research – Love the numbers, not the property • Average Days on Market – Sales & Rental • Vacancy Rates • Median Price – Listing & Sold • No. of Auctions • Clearance Rates • Level of Discounting • Comparable Sales • Low, median & high price ranges • Sales History • Listing History
- 29. Research – Love the numbers, not the property
- 30. Research – Love the numbers, not the property
- 31. Research – Love the numbers, not the property • Jellis Craig - Fitzroy: 9 sales with average of 22 days • Nelson Alexander – Fitzroy: 21 sales with average of 30 days • Peter Markovic Real Estate: 2 sales with average of 26 days
- 32. Research – Love the numbers, not the property • Hocking Stuart – Brunswick: 10 rentals with average of 18 days • Nelson Alexander – Carlton: 6 rentals with average of 11 days • Nelson Alexander – Fitzroy: 26 rentals with average of 25 days
- 33. Sales Brochures
- 34. Sales Brochures
- 35. Sales Brochures
- 36. Sales Brochures
- 37. Property Analyser – 10 year forecasts
- 38. Property Analyser – 10 year forecasts
- 39. Property Analyser – 10 year forecasts
- 40. Property Analyser – 10 year forecasts
- 41. Property Analyser – 10 year forecasts
- 42. Property Analyser – 10 year forecasts
- 43. Property Analyser – 10 year forecasts
- 44. Development Search – Free Membership
- 45. Development Search – Pro Membership
- 49. Are you ready to take action?
- 50. Option 1: For Hands Off Investors
- 51. Premium Membership • Complete end to end solution to help you purchase profitable investment property • Team of industry experts working for you • Achieve the outcome without the stress or hassle
- 52. Option 2: For DIY Investors
- 53. Pro Membership Sign Up at – www.realestateinvestar.com.au $149 per month No minimum term Access to Pricefinder included Access to Xero Accounting Month to Month membership 100% tax deductible
- 54. Poll: Would you like… Premium Membership: Strategy Session OR Pro Membership: 1-on-1 Demo
- 55. Get your FREE tickets at – https://info.realestateinvestar.com.au/events
- 57. Questions? Register for a personalised 1-on-1 demo - https://info.realestateinvestar.com.au/1-on-1-demo OR Sign up at - www.realestateinvestar.com.au Book a free strategy session – https://info.realestateinvestar.com.au/premium- membership
Editor's Notes
- We are focused on helping investors achieve their goals, and above all help them acquire their next investment property. We aim to help setup a systematic approach to reducing debt and building wealth. Ultimately our goal is to help you purchase the perfect property, at the right time, at the best possible price."
- Full turn key
- With House & Land you are paying loan repayments where no rental income is coming in whereas off the plan, there are no expenses until the build is complete and handed over to you.
- Garage doors & remotes. Very important you know what is included with the build and to read through the contract carefully. Your definition of turn key / read to move in can be very different to the builder’s definition so make sure you confirm what is included to avoid any unwanted surprises on completion.
- 10% deposit to secure a property which is held in a solicitor’s trust account until project is completed. Some cases deposit can be less. Gives buyers a chance to organise finances in time for settlement. Brand New – who doesn’t want a brand new property? If you’ve purchased a brand new car before remember the feeling of it when you first sit in it, the smell & the fact that with the house you can make it your own knowing no one else has ever lived in it. Given the property has never been lived in, you’ll have no wear & tear and so repairs or maintenance in the first few years should be very minimal. Able to purchase at today’s prices and relying on the market growing between when you pay your deposit and settling the property, that’s capital growth you’ve earned without even having a loan to pay any interest on! Unlike existing properties, new homes will have structural warranties for a period of time in case there any defects.
- Most new off the plan properties will have modern appliances and facilities such as gyms, pools, common bbq areas and other amentities. As renters, they will generally prefer to live somewhere newer than a run down property so it makes it easier to rent and reduces risk of long vacancies. Some developers will allow you to make modifications to the plans to suit your requirements, extra costs will obviously apply. New properties will give investors significant depreciation benefits and improve their after tax cash flow. Also with the recent federal budget changes, investors are now only able to claim depreciation on plant & equipment items such as ovens, dishwashers, fans, light fixtures. Previously investors could claim on these items even if they didn’t pay for them but now the legislation states these items must have been incurred by the buyer.
- Given property hasn’t been built, you can’t physically walk through the property. Final product is based on paper plans, a display property or computer renders so the end product may actually differ slightly to what was anticipated or promised. Make sure you check the contract thoroughly, worth getting a lawyer, to see what is actually included. Most people would think driveways and fencing is included but these are generally considered to be extras. Sunset clause is when the project needs to be completed by and it protects both the buyer and developer. If it’s not built by this date the deposit can be returned in full to buyer or a new contract can be drawn up. You may have heard of stories recently where the value of the property has gone up and a developer will take advantage of the sunset clause, cancel the contract so they can sell to another buyer at a higher price. Given it’s a new property, for units or townhouses strata levies may be more expensive but not always the case; especially if you have lifts, swimming pools, a lot of landscaping to maintain. Plus things like gyms and BBQ areas will also contribute to higher fees.
- Interest rates may increase during construction so loan repayments will be higher than anticipated when construction is completed which means cashflow is affected. Need to budget for rate rises. Financing can also be an is issue if the lender changes their criteria for lending if market conditions change. They may change their policy on loan to value ratios or APRA decides to implement stricter rules. Most off the plan properties are part of a larger development so there can be similar stock being built. For e.g. unit in a complex of 50. Your property is then 1 of 50 and there is no uniqueness about it which can make it difficult to resell or rent with so much similar competition. However, if buying in a good area in high demand this will be less of an issue i.e. waterfront, walking distance to major university or hospital. Market value decreases, biggest risk is the value of the property at completion is worth less than what you’ve paid.
- Buying off the plan property on the edge of the city will g
- People want to live closer to vibrant activity centres where they can meet with friends and spend time with family. Cafes, restaurants, supermarkets and major shopping centres should be in close proximity. Properties within 10-25 km radius of large city CBDs will be highly sought after. There is generally not much land left for development which means supply will be limited. The only way to increase supply is to build up. Public transport links – buses are good but there is issue of traffic congestion so having option like train or even ferries will make the area even more attractive. Schools are now one of the top drawcards for attracting people to an area