The Ultimate Guide to Buying Off the Plan
3 Easy steps to buy off the plan
Buying off the plan is a great option for people looking to get a foot on the property ladder and start the next stage in their life. By reading this ultimate guide to buying a new property, you will be much more informed and savvy about planning to buy off the plan (OTP).
Location Location Location
Whether you’re looking as an owner-occupier or investor, location is one of your most important considerations. It’s important to understand where an OTP project is located with relation to transport infrastructure like freeway access; educational institutions; train, tram and bus stops, and amenities including shopping and cafes.
Consider the location related to your preferences: if you want tranquillity, a property in a busy street or precinct may not be suitable. Likewise, if you are after a family home, preference properties close to educational institutions.
For Owner-Occupiers: You will be living in this property and you need to be sure that the location of the project will give you what you want: whether that is tree-lined tranquillity or connection to the vibrancy of Melbourne.
For Investors: Consider proximity to educational institutions and public transport links as a way to minimise vacancy and maximise returns.
What are you looking for?
In this early stage, it’s important to develop an understanding of what you are looking for based on the market. Whether you are looking as an owner-occupier or as an investor, it is important to keep in mind that your situation may change in the future – it is a good idea to look for properties with good design and great finishes that fulfil your dreams as an owner-occupier but would also work as investment properties and vice versa!
For Everyone: Figure out what key features of the property you are looking for and reflect on your long-term plans considering flexibility and changing needs.
Choosing your property type
There are advantages and disadvantages to every property type – it is important to be aware of these to make an informed choice.
If you’re comparing a boutique apartment development, townhouses and a large scale project, it is important to be aware of upkeep costs, body corporate and liveability differences between these three.
Don’t underestimate the value an apartment can deliver in letting you access prestige, high-value areas without the price tag of a house or townhouse.
Once you’ve gotten an idea of what is available on the market and what you’re looking for, it’s time to figure out what developers you will contact. If you don’t work in the sector, you may never have heard of any property developers, if this is the case: don’t stress!
When looking at developers, look at how many projects they are selling, where they have worked in the past and how long they have been around for. This will give you an idea of their experience and reliability.
For everyone: Look for a medium sized developer with a few projects currently available as well as some in the ‘pipeline’ – this means they have sufficient expertise to develop projects simultaneously while also valuing you as a client. Try to avoid small or one-off developers because they may lack experience or expertise in navigating the complexities of property development.
Step 2 : Choosing your property
This is a key consideration for OTP buyers, ask your developer about the planned timeline of the project and the timelines of their other projects. Typical project development timelines vary based on size but can range from 12-18 months.
For everyone: When comparing boutique developments and large scale developments, it is important to remember that the larger a development is – the more potential complications and delays there may be.
Design & Sizing
An important consideration for most people is the size of the apartment. Despite size being an important factor, it is equally important to be aware that size is not everything. A well-designed apartment with good lighting and good ventilation that is 70-80 square metres will feel much bigger and more liveable than a badly designed 100+ square metre apartment.
For everyone: When getting acquainted with the design of an apartment, it is best to visit display suites and offices in order to have an employee walk you through floor plans and finishes in person.
- Aspect & Configuration
Melbourne is luminous all year round with mild winters and warm summers. This great climate allows you to be more flexible with aspect of your OTP property – there will be differences in light exposure but you will rarely be in the dark (apart from at night!).
The configuration of your property is vital; make sure your developer has worked with architects to assure a light drenched interior that will remain well-ventilated, functional and liveable.
Step 3: Decision made/Contract stages
- Contract signing
Once you’ve found your perfect OTP property, you’ll sign a contract and pay typically a 10% deposit within 7 days to reserve your dream purchase.
For Everyone: When looking for a lawyer/broker/conveyancer to help you through this process, make sure to choose someone who understands the nature of OTP development and contracts
- Before Settlement
Your developer and/or agency will keep you updated through the development process but particularly as settlement date approaches.
Approximately 3 months before settlement, the developer will notify you. This is the period when your mortgage broker and conveyancer will get busy finalising all details of financing.
When you complete your walk-through of the property prior to settlement, make sure to note all issues and problems and discuss them with the developer – this walk-through is similar to a ‘rental inspection’ prior to renting where you can walk through the property and highlight any issues.
For everyone: Highlighting issues and communicating clearly with your developer and builder is important. Make sure the builder and developer are aware of any issues prior to settlement so they are able to resolve them with maximum efficiency and minimum delay.
Once you have resolved any issues during the pre-settlement walk through, your bank and the developer’s bank will book in settlement for a day when remaining funds are paid to the developer and ownership will be transferred to you.