BjoernParticipant@suoksaJoin Date: 2015Post Count: 23Corey BattParticipant@cjaysaJoin Date: 2012Post Count: 1,010
A strategy of buying OTP, suggested by a seller of OTP? Who’d have thought?!
OTP has many hazards, if it’s as simple as buying in areas with expected CG, you can just buying existing stock on the markup without these pitfalls.Richard TaylorParticipant@qlds007Join Date: 2003Post Count: 12,018
Wouldn’t risk buying an OTP property in the current climate.
I believe you can do just as well buying an established property in the right location.
Yours in Finance
0-40 Properties in a decade. Ask me how.BjoernParticipant@suoksaJoin Date: 2015Post Count: 23
Thanks for your answers guys.
What would you say are the risks with OTP compared to established? Is it mainly the risk whether it will be a popular place to live in since no one has lived there before? On the other hand you would expect to have less cost for repairs with OTP, I think.BennyModerator@bennyJoin Date: 2002Post Count: 1,376
What would you say are the risks with OTP compared to established?
Overpaying would be the #1 risk in my opinion. Where a company is selling OTP properties, they set the prices, and each tranche is more expensive then the last – why? Because they say so.
Then, if a greenfield estate, the lack of infrastructure would have to be a biggie too. Down the track, property is very forgiving – and I’m sure your parents, if they bought new OTP way back when, would have seen huge Equity growth. But so too would those who didn’t buy OTP, but instead bought an existing home for a lower price.
On the other hand you would expect to have less cost for repairs with OTP, I think.
Less cost for repairs – yeah, that can be true – and you (arguably) get better Tax Deductions with buying new too. But what you don’t get is any hidden value propositions with your new property. e.g. it will likely be on a small block with no chance for redevelopment into the future. Compare that with buying an older existing house on a large block with a discount to “new price”.
Steve would say “Buy a problem and sell the solution”. By buying new, you are buying the solution instead, with no chance of fixing any problem and getting paid above-the-odds for it – the builder/developer is doing THAT.