When you make a property investment, you generally want to ensure that it will be smooth sailing and problem-free. But that won’t always be the case. When you are purchasing property in Australia, you do have the option to pre-buy off the plan. Whether you’re buying property as an investment or a family home, you may want to avoid as many risks as you can.
In this article, we’re going to take a deep dive into five of the most common issues purchases come across when pre-buying property off the plan so that you can make an informed decision. Let’s get into it.
As with any investment, it can be hard to make a solid call as to whether something is a strong investment or not. But, generally speaking, buying off-plan can come with its benefits. From being able to secure a spot in a sought-after location to having a fully-renovated, modern property completed for you, to choosing an investment that will go up over time. This applied whether you purchase a family property for yourself or you want to go into property management. However, there are also risks.
Now, any time of property investment is going to come with some risks. But there is a range of unique considerations to bear in mind when it comes to pre-buying a property off of the plan. It’s important to give these a lot of thought before you go ahead. Let’s take a look at some of them now.
One of the most common problems you may face is delays with the timescales. You’re likely to be given an estimated completion date when you sign your contract, but there are no guarantees. Construction projects are often overrun due to weather, supply-chain issues, and other delays. This could mean that you may need to wait longer before you can move into your house or even reapply for your financing if your offer runs out.
Another thing you need to be aware of is that you’re buying based on a plan. That plan may change and they may not even be finalised when you agree to the sale. It’s common to not know what the property will actually look like, both aesthetically and in terms of layout when it’s finished. So you need to be sure that you’ll be happy with the finished design whether you’re buying a family property or buying property as an investment.
Then we have to be aware of how the property market works. Of course, the market fluctuates all the time, meaning that house prices can change from month to month. Depending on how long the construction takes, you may find that the property value changes. If you’re buying a family home, you may not mind that so much. But if it’s a property investment, you could lose money right off the bat if the market goes down.
Now this one isn’t one that you’re going to want to go into this agreement expecting, but it happens. What if the developer runs out of cash during the project? Not only could this lead to problem one – delays, but they could even go out of business. You can’t always know that they will have the cash to complete the construction. So, you’re putting a lot of trust into their business to ensure that the build is completed, not just on time, but ever!
Finally, we have the idea of the project duration to think about. This isn’t in terms of delays but has more to do with how developments work. Properties are sold off-plan sometimes even before construction begins yet can take years to complete. So when the first few houses are ready to go, you could be living in a building site for years while the rest of the development is completed! Not only could this be an issue for your family, but as a property investment, it might put tenants off from moving in too!
There are always going to be problems that come up when you’re buying any property in Australia. But you may find that those linked to pre-buying property off of the plan are unique. Just be sure to weigh up the issues for your property investment to make sure it’s the right choice for you.