Buying off the plan investment property is a property that hasn’t been built yet. However, there are many of them in the market promoted as promising project to invest in. you may have read or watch commercial about new apartment project proposal in quite large number. There are many investors who are brave to invest in this type of investment property. However, you shouldn’t follow what others do just because you think it’s cool or tempting. You need to know the good and bad in buying off the plan investment property. Thus, you know what you are getting into.
About off the plan investment property
Every type of investment has its own risk and weigh you should consider. Before buying property, it is highly advised to examine every aspect so that what you buy will be more valuable in the future. Doing buy off the plan is actually riskier than usual investment property that has been built. Here are things you should know about buy off the plan investment property:
- Most people are tempted to do buy off the plan mostly due to the convincing ads and promotion through media. In the advertising, cheap prices are the highlight of buy off the plan. Thus, people are more interested. Investing in property with lower price than average is of course tempting. However, you also need to be aware of the risks.
- There are many risks when it comes to buy off the plan. The major ones include oversupply. Besides, this type of investment property involves creation of primary and secondary market which cause another risk. For your information, second owner will not receive the same tax benefits. Second owners won’t also be able to claim negative gearing against their wages. It is different if you are the primary owner.
- There is high risk for the vendor to drop the property value due to lower benefits to the buyers. Thus, it forces price reduction. The property values will falling significantly and of course it is not a good thing to happen.
- It is rare for buy off the plan to make good investment. Thus, it is highly advised to think many times before deciding to do buy off the plan no matter how tempting it looks. It is highly possible for you to gain less that you paid. If it is not a good investment then why there are many people who still promote this type of investment and lots of people do it? Well, you might want to find out more about property development and how it works in larger scale such as apartment projects.
- It is often that many off the plan projects being marketed won’t get out of the ground. Of course you will get your deposit back if this happens. However, it means that you just waste your precious time in investing something that is not worth your money. There are too many risks in this type of investment property so it is wise to not jump on it blindly.