I have been watching the market recently and have found that if you can find a good location and buy from a Builder/ Developer of the plan that you could make some good Capital gain. But the problem is how to find out when and how you could have first choice at picking the house/ unit before anybody else has?
Has anyone have experience with this type of purchase and how did you manage to get best choice?
Dom [biggrin]I am not sure I agree with that. Prices by developers always charge market if not more so they build in their profit.
It may have been true over the past few years as you buy now off the plan and if completed in 12 months you may have some gain. But developers always include that gain in the price anyway.
Now that we are at a stage where something bought now may in fact be worth less in 12 months upon completion.
Just be careful.
Yack,
Why then do they sell so quickly ,especially the ones with prime locations eg Sea views, size position.
Dom[biggrin]Salacious,
I suggest you try to track down many of the people who bought off-the-plan in areas like Melbourne Docklands.
They’d certainly have a story to tell you about the huge capital gains you can make through buying off-the-plan.
Make sure you know the market VERY well when making this type of speculative investment. You’re not buying a property, you’re buying a future property with the all the additional risks inherent in predicting what the market will be like when the property is finished.
Of course you could flip it before building finishes – but that comes with some risks as well….If the people who buy from you can’t settle, the developer may have recourse to go back to you & demand that YOU pay for it.
Cheers,
Aceyducey
hey dudes isnt buy OTP like buying site unseen? must be i guess coz you buying building you cant see yet expect on paper yeh?
at leest if you buy online of the net yu can see pics first![biggrin]Inner City apartments seem to sell quickly because they are marketed well.
As for surburban, new properties people probably want a new PPOR. Some people are prepared to pay more for a new property. Its a bit like a car. No maintenace hassles and you got your weekends to yourself and any repairs covered under warranty. But in my view you are paying extra for that.
My brother is a carpenter and works for several builders. He tells me people are still paying good prices for new townhouses etc.
Me – I would rather buy a property that is a few years old, like buying a car 2-3 yrs old v a new one.
I bought two townhouses OTP and did reasonably well. They were the last batch so I had a chance to see the other buildings from the developers and I was happy with the finished prodcut. The area was good and the type of dwelling was right.
I have sold both now to realise the CG. The only dilema I have now is confidence in my ability to read the market. At first I thought I had an ‘eye’ for picking winning property but I have had to be honest with myself and admit that during this latest boom, 99% of all property investors made very good CG.
With OTP purchases, i believe there are Stamp duty savings also, is this correct ??
Dom are you looking at buying for a quick resale ?
or to hold as a rental..
REDWING
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorDom,
Sounds like what you’re speaking of is more like mezzanine financing- whereby private investors fund the building of the building. To my knowledge, the returns can be high risk and around 12% or less return and lower risk.
I am not sure developers take on little people and say “come and buy this property off-off the plan, and you can have it for 100k less than the off-the-plan people.” What I do think is that if you park your money with them, you might be able to use some of that return to buy one of the props, so it *seems* cheaper.
I remember a few books and courses around about the secrets of getting in with developers and getting cheap properties, but the books and courses fizzled, as the dangers of mezzanine financing became known to the community.
I just don’t know how developers would make money if they found people on the streets and let them buy IP’s for basement rates.
I also remember when the word about town was “OTP” and the rhetoric is that they were cheaper than when the apartments were built… but I reckon that big myth has been exploded. Look at any development now. Say onbe in sydney- a 200-unit apartment block starting at 330k OTP. As soon as the block is built (and they go up super quick these days), the built ones are still 330k. Any CG made on OTP’s was because of market rise, I reckon- not OTP “discount”.
kay henry
Thanks for the input Kay.
On the particular investment i am looking at their are 20 units and ten have sold and it has not been on the market long it is about 10 min walk to beach and it is a small beach town.At $260,000 for two bed unit i feel it is not a bad investment.This area is north of brisbane so Acey dont know much about melbourne.
Redwing this is for investment for a quick profit after say one or two years Capital gain and i holiday their quite frequently.
Dom[biggrin]Well Salacious sometimes the best way to learn is to get burnt.
Keep in mind after the fact that most property is best suited for investing in longer timeframes
Cheers,
Aceyducey
Originally posted by redwing:With OTP purchases, i believe there are Stamp duty savings also, is this correct ??
Hi Redwing,
Stamp duty savings can be realised if the contract is basedon buy the land then build the property type contractual arrangement. If the purchase is the total (land and property) then there are no stamp duty savings to be made.
Dom, As a rule of thumb I suspect the making of a quick buck in growth terms is less likely over the next 5 years or so – consider as a long term investment and you should get a better outcome.
Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
Stamp duty savings are possible in Victoria for OTP purchases – I believe it is levied on what state the building is actually at….
Cheers
MelOh, and bloody so it should be cheaper- for something in victoria! check out this stamp duty calculator. I chucked in a figure of 250k. Victoria is 4k more exxy than NSW, and what is with qld? 4 times cheaper for stamp duty than vic! (oops- madly editing my post here
The Qld figure is the owner/occupier one [baaa]http://www.loan.echoice.com.au/stamp.html
kay henry
Originally posted by melbear:Stamp duty savings are possible in Victoria for OTP purchases – I believe it is levied on what state the building is actually at….
Hi Mel,
Yes you are right Victorian Stamp Duty can be on a sliding scale if the buidling is part finished – another classic example of different rules for different states – don’t you just love it
[exhappy]Derek
[email protected]Property Investment Support Available. Ongoing and never stopping. PM welcome.
I won’t say that I’m an expert in this, but I do know that in order for the developer to secure the loan to build the block of unit. They need to achieve a certain level of pre-sell (say 40%) being sold off the plan. I would imagine they would offer some kind of incentive for investor. And naturally in a rising market, if they sale of the plan at the current market price, by the time the building is completed in 18mths time, the value of the unit would had gone up… but at a stable market, I would say that they need to offer some kind of discount.
Joseph
Hi all,
This discussion is most interesting. Its the first time I have heard any +ve feedback (from the purchaser’s point of view!) about buying OTP. I hope there is more to come.
ThanksRegards
Patrick
The dumbest question is the one you don’t ask.
Patrick,
Melbear is our resident expert on buying OTP’s- she has a heap of them. I am sure you could ask her anything you’d like to know and she’d help out. she’s on holidays in the wilderness now though
kay henry
in large projects you will get the best OTP prices at the start as the developer will need x% sold in order to get the bank financing. The other good deals come at the end of the sales program when the developer just wants to clean the project up.
Extensive list of ‘Off The Plan’ property available for sale in Perth.John – 0419 198 856
Thanks for the imput everyone.
I am quiet active in investing at the moment because i am cashed up and looking at lots of oportunities and this is a great forum to ask those question.
Dom[biggrin]
The Qld figure is the owner/occupier one [baaa]
You must be logged in to reply to this topic. If you don't have an account, you can register here.
