Forums / Property Investing / Help Needed! / Off the plan property investment – questions

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  • Profile photo of blaggerblagger
    Participant
    @ajham
    Join Date: 2016
    Post Count: 3

    All – my wife and I have been discussing the idea of property investment to reduce our tax bill and also to pay down our own residential mortgage. We’ve been engaging a rep from Pillar Financial Group, who has detailed an off the plan 4 bed off the plan property for us in Cranbourne. we’ve signed the contract and paid $1000 – however thinking about it not so sure it’s the wisest of choices and would like my own solicitor to review the contract.

    Is there any way to extend the cooling off period? I assume that if we do pull out then we lose the $1K – anyway to prevent that?

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,065

    Tread carefully.

    OTP has plenty of cons. If you do some research online you’ll read all about the good/bad side of OTP investing.

    Also – it’s not a good idea to invest if the primary motivator is to reduce your tax bill. It’s a flawed way of thinking – you give away $1 to get back between 30 to 50 cents.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of Ethan TimorEthan Timor
    Participant
    @ethantimor
    Join Date: 2016
    Post Count: 282

    Totally agree with Jamie and…

    would like my own solicitor to review the contract.
    Is there any way to extend the cooling off period? I assume that if we do pull out then we lose the $1K – anyway to prevent that?

    I believe it’s prudent to get your solicitor to review the contract ASAP and ideally before you sign (too late for this one, I know, but moving forward).

    Not a lawyer so can’t say for sure but I would presume that unless there is a clause that allows you to extend the cooling off, then you can’t. However, you can tell the vendor that you want to consult your solicitor and you’re asking to extend the cooling off. If they feel that if they don’t agree, they get the $1K but lose the sale, they might agree :-)

    Hope this helps?

    Cheers,
    Ethan

    Ethan Timor | Aligned Finance Pty Ltd
    http://www.alignedfinance.com.au/
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    Active Investor & Broker; Based in Northern NSW, servicing Australia wide; Author of '34 Proven Ways to Maximise Your Borrowing Power' (download free from our website)

    Profile photo of blaggerblagger
    Participant
    @ajham
    Join Date: 2016
    Post Count: 3

    thanks all. We’ve requested an extension to the cooling off but it’s not long enough for our solicitor to review. I’m trying to see now if they’ll refund the 1k since it was nt made clear that this was non-refundable. If not – write this one off to experience.

    Profile photo of hydramaxhydramax
    Participant
    @hydramax
    Join Date: 2009
    Post Count: 47

    with OTP investing what guarantee do you have that the developer won’t go bust. Irrespective of how big or how small.
    Huge risk unless you think it reasonable to lose the insurance premium for a Deposit Bond.

    Hydramax

    Profile photo of JerryJerry
    Participant
    @jerry_o
    Join Date: 2013
    Post Count: 46

    I don’t think there is a 100% guarantee to that @hydramax. You can check the reputation of the developer and ask around as well. Check their history and such. Another con to OTP purchase, and there’s so much more. So be careful with OTP purchases.

    Jerry | Mortgage Station
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    Finance Strategist - Active Investor - Serving clients Australia-wide - Based in Sydney / Melbourne

    Profile photo of Patrick OwPatrick Ow
    Participant
    @patrickow
    Join Date: 2015
    Post Count: 9

    Hi Blagger

    Could you please share with us the reasons given as to why Cranbourne was suggested to you for an OTP purchase and how does this purchase fit with your objective of reducing your tax bill.

    To reduce a tax bill, if that is the only goal in property investing, one should be looking at a negative greared property.

    Thanks

    Profile photo of Tony FlemingTony Fleming
    Participant
    @the-dark-knight
    Join Date: 2008
    Post Count: 396

    As Jamie said the negative gearing concept is flawed. You lose money to save tax compared to paying tax on profit. I know which one I would prefer to utilise. OTP as others have stated is quite risky as well. Good luck and I hope you get your deposit back if you decide to pull out.

    • This reply was modified 2 years, 9 months ago by Profile photo of Tony Fleming Tony Fleming.

    Tony Fleming | Triumphant Property Group
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    NSW Buyer's Agent specialising in Western Sydney-Blue Mountains-Orange-Albury

    Profile photo of Corey BattCorey Batt
    Participant
    @cjaysa
    Join Date: 2012
    Post Count: 1,010

    A couple red flags:

    OTP – Buying OTP is fraught with danger. In general there are always good and bad properties, but this type of property sale leaves people locked into long term contracts which may result in poor valuation and subpar stock. As they’re generally apartments/units/townhouses it can mean you buy into a property which has weak appreciation through ongoing new supply coming into the market and tempering any chance of growth.

    Chasing tax deductions – investing in property with the primary focus on tax deductions is a flawed way of growing your wealth, as it’s just throwing good money after bad. Don’t try lose money to get part of it back, instead invest in good quality property which will provide you with the return to grow your assets and wealth.

    Corey Batt | Precision Funding
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    Investment Focused Finance Strategist - servicing Australia-wide

    Profile photo of Hari YellinaHari Yellina
    Participant
    @yellina
    Join Date: 2007
    Post Count: 101

    You dont need to buy a new property to get negative gearing benefits. Well located properties in Capital cities. Close to City and near good schools are better place to buy. You can negatively gear them and reap the tax benefits.

    Hari Yellina
    Email Me

    Keep Investing - Grow while Resting.

    Profile photo of blaggerblagger
    Participant
    @ajham
    Join Date: 2016
    Post Count: 3

    so I pulled the pin on this within the 3 day cooling off period. Cranbourne was recommended to us by the rep at Pillar Financial Group as a growth suburb but having done my own research into the property price points it was evident that we were paying a premium at any capital growth would be non-existent.

    I’ve requested the return of the 1,000 dollars – on going trough the recordings I made of the meeting it was nt clearly mentioned that the $1000 would be non-refundable. If not forthcoming ASIC will be receiving copies.

    Profile photo of JerryJerry
    Participant
    @jerry_o
    Join Date: 2013
    Post Count: 46

    good thing you asked the question here. :)

    Jerry | Mortgage Station
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    Finance Strategist - Active Investor - Serving clients Australia-wide - Based in Sydney / Melbourne

    Profile photo of TerrywTerryw
    Participant
    @terryw
    Join Date: 2001
    Post Count: 16,110

    so I pulled the pin on this within the 3 day cooling off period. Cranbourne was recommended to us by the rep at Pillar Financial Group as a growth suburb but having done my own research into the property price points it was evident that we were paying a premium at any capital growth would be non-existent.
    I’ve requested the return of the 1,000 dollars – on going trough the recordings I made of the meeting it was nt clearly mentioned that the $1000 would be non-refundable. If not forthcoming ASIC will be receiving copies.

    Did you record their conversations without them knowing? This could be a criminal offence.

    What does the contract say about the refund of the $1000. It probably don’t matter whether they said it was refundable or not.

    Department of Fair trading would be the department to complain to about this as they regulate agents and not ASIC – were you actually dealing with an agent?

    Terryw | Structuring Lawyers / Loan Structuring Pty Ltd
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    Profile photo of NessNess
    Participant
    @nessmc75
    Join Date: 2017
    Post Count: 3

    We just got ourselves in the same situation? Any advice?

    Profile photo of SarahSarah
    Participant
    @sarahlouise
    Join Date: 2017
    Post Count: 10

    A friend of mine was in a similar situation before and she wasn’t able to get the deposit back. They just told her that it is non refundable and that it was mentioned while signing the contract… Be very careful of OTP’s as they have got no guarantee :(

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