, , , , , ,

It may make you wonder – why on earth would anybody buy a property that hasn’t been built yet. People are buying retirement village homes or apartments as they are advertised for sale before the building has been constructed. Buying a property whose design of building and sketches of its final appearance are yet to get final – is commonly termed as buying of the plan.


Research: Never ever buy the first property you at. Always understand median apartment prices growth, vacancy rates, rents, employment statistics, and demographics (understand who are going to be your prospective tenants and what sort of accommodation they want).

Time: Generally, property prices in Sydney increase annually by between 5% – 7%, but occasionally there may be a dip in values. Nothing to panic here, your investment will serve you well. And with the strong performance that our property market is seeing at the moment, you can feel confident.

Check: Always keep an eye check on your property. Revalue your investment property or properties on an annual basis. It will also give you a clear indication as to how your investment is performing. This will help you to reinvest in an additional investment property by negotiating a larger loan when the time is right. Note: valuation should be done on capital value of property as well as rental value. Check out the developer. Find out who the developer is, what else have they done, have they always delivered? Were other buyers happy with the end results?

Where to Buy: A recent study showed that the top 3 priorities people have for choosing somewhere to live are proximity to schools, work and transport. Some other things to consider are shopping, parks, cafes, restaurants, water and the size of the property. It is simple as people want to live in areas because of the benefits that are associated with that area.

Vision: One must earn profit from a good investment over time. Judge the investment first, not the tax benefit. As a result, invested property should give you a steadily increasing income. While this income will incur some tax, it is important to consider a prospective purchase from its total investment value, not the taxation benefits you receive (negative gearing for example). There is no point in having the negative gearing without capital growth.

Payment: When buying off the plan, the date for completing the contract is usually not until the building is finished. Commonly, the buyer pays a deposit to secure the property, with the balance payable upon settlement.


Budget: Don’t over stretch your budget. If you are buying your first investment property, the best advice for you is to be conservative, set yourself a budget and come in under it if possible. Don’t put yourself under financial pressure. I believe wealth has to be built on solid foundations over a period of time.

Alert: Don’t get reassured into a false sense of security just because you’ve been told a number of presales have already occurred. You’re likely to find many are at inflated prices to overseas buyers who are unable to buy established properties, have little knowledge of the local markets and have unique motivations for buying property in Australia such as a desire to emigrate in the future or place their money in a more stable country.

Organize Finance: Don’t expect the agent or developer to wait for you to get your finance organized. Most banks will not give you an approval more than 6 months before completion anyway. Get an indication from your bank that you will be OK then go for it.

Finished Product: Always keep yourself clear that when you buy off the plan, you are paying for a property where the finished product may be different from your expectations.

Contract: NSW Fair Trading recommends that potential ‘off-the-plan’ buyers think carefully before entering into a contract to buy premises which have not been built. Caution should be exercised and appropriate legal and other advice obtained before signing any documents or paying any money.

Conditions: All the conditions of contract should be closely cross checked. Legal advice should be obtained on the benefits or restrictions provided by the terms of the contract.

    • Consideration should be given to whether there are any penalties for withdrawing from the contracts.
    • Can I make changes to the finishes in the kitchen and bathroom?
    • Can I select appliances such as stoves and dishwashers and items such as floor and wall tiles?
    • If the building is finished earlier than expected, has finance been suitably arranged?
    • What are my rights if construction is delayed? Is my deposit secure if the building doesn’t proceed?
    • Can I on-sell during the construction period?

Always read your contract and obtain advice from a lawyer or licensed conveyancer.

Saahib Kaur
Waratah Estate Agents Team