The Australian dream of owning a home with an outdoor dunny may be dead, but buying an off the plan apartment is certainly a rite of passage for countless budding home owners in major capital cities these days.
The hardest part is usually the simplest: How do I even start when I can’t see the finished product?
“It’s deep but these are the things you have to factor in when looking at off the plan properties.”
Buying your first apartment off the plan doesn’t need to be a swindling rocket science ending in disappointment.
That’s why we hit up one of Eastern Sydney’s most successful real estate agents with over a decade’s worth experience in the prestige market to reveal everything you need to know about hunting down your perfect humble abode.
Construction Companies Make A Big Difference
Always look for a reputable builder when seeking out any off the plan apartment. That’s one of the fundamental requisites, according to Edward Brown of Belle Property, who specialises in Sydney’s beachside, parkside and thriving inner city markets which are brimming with off the plan apartments.
“Always look for someone trusted, someone who’s done it multiple times rather than a construction firm running their first rodeo,” explains Brown.
“Also look at the pictures to make sure what’s in the display suite actually matches up with the end product.”
Whilst there might be little difference between the leading residential construction firms, it’s the lesser known ones that buyers need to be weary of.
Being well-informed about the construction company that built the apartment block will ensure your investment will appreciate with the development.
Research Can Make You Rich
It’s called due diligence for a reason and it’s designed to prevent new buyers from wandering into dodgy or dangerous real estate whilst maximising their investment potential.
The hard part is that it’s done entirely on your own accord. Here’s what you should be looking for before signing the dotted line.
Investigate The Surroundings
Whilst a location based on a fancy suburb name alone maybe the deal clincher for many, there’s still a list of finer details that buyers need to look at when purchasing new apartments.
“It’s deep but these are the things you have to factor in when looking at off the plan properties,” says Brown.
Here’s a run down of his essential checklist for location.
- See what else in the area is like your apartment and has sold for a similar value
- See what those other developments have traded for at a per-square-metre rate
- See what advantages those blocks may have over the block you’re looking into buying
- Scope out the area in terms of infrastructure – any buses, trains, schools, shopping centres and hospitals?
- How central is the property to your lifestyle needs and is it easy to get around to friends or family?
- Pay careful attention to the demographics of the location as this changes with the area’s development and can directly impact the property’s value
Look At What’s On Offer Structurally
Display suites are intentionally flashy to capture the attention of potential buyers looking at off the plan. Whilst that’s fine as a marketing tool, the real homework you need to do is making sure what the models, displays and brochures depict is what you’re actually paying for.
Here’s what you should be looking at with regards to the bricks and mortar end.
- Ensure there’s not much change that can go on beyond the display suite
- Make sure the apartment isn’t going to lose any square metres once it’s built
- Look at the commercial facilities that will be attached to the block – cafes, restaurants, medical centres and supermarkets can all affect property value
- If you’re buying a car space, a garage or a store room, be sure that it’s all marked and tight in the contract to prevent the developer from changing these specs at the last minute
Where To Get More Answers
Checking off points is one thing but there needs to be external information factored in to make sure your purchase isn’t compromised after you’ve handed over the cash.
“If you’re buying off the plan it’s important to realise any other properties being built around you,” says Brown.
“If one ends up in front of your balcony, then you’ve lost any real aspect you may have been buying into – sweeping harbour views? Gone. And there goes your property value, natural light and living enjoyment all in one go.”
The answer here is to seek more answers where available. Do your research through council websites where some information is made publicly available. This can help buyers determine what is being built around their apartment.
Strike A Deal To Add Value To Your Apartment
You can negotiate on a new car so why not on a new apartment? The rule of thumb here isn’t to negotiate so much on price, which is often rigid for off the plan apartments, but on unique additions to your home.
“Negotiate on terms and what extras you can get off the plan,” says Brown.
“Buying this way gives you the possibility to buy something with extra storage and extra joinery at the end.”
So instead of settling for the basic basin and tapware which every other apartment gets, try to negotiate for something a little more aesthetically pleasing or expensive.
“It’s a raw product – ask to see what more you can get out of the property.”
“Buying a one bedroom apartment usually won’t come with a bathtub, but say your partner loves a bath…ask if they can get a bath put in there,” says Brown.
“More importantly, ask them if you have to pay a bit more or can you get that included in the contract price?”
The way to look at this negotiating process is through customising your own place so that it stands out from the rest.
“If people buying new cars can tick all the options, the same be done for those buying an off the plan property. It’s a raw product – ask to see what more you can get out of the property.”
Forecasting For Future Value
It’s important for buyers to realise that when they’re purchasing an off the plan apartment, they’re paying for a forecasted price on that development – always determine whether this forecasted figure is worth it once completed.
“Like any purchase, you’re buying an investment and buying a property which is all about a long term strategy,” says Brown.
“You should be looking to see if that area will grow well over a five year period and double your money in the same period.”
How To Tell If It’s A Lemon
Unfortunately there’s no sure-fire way to tell if an off the plan apartment is a lemon.
“Every building is always going to have a defect or two and that’s normal,” says Brown.
Don’t freak out back to the dog house though. In Australia there’s something called a Builder’s Warranty which is designed to protect buyers when going through a defects list with a developer. Due diligence however is still the number one priority.
“Have open lines of communication with your agent, the developer or builders,” adds Brown.
“Do your research and if you’ve seen the area offering growth then it should not be a lemon. Buy on a good floor with natural light, space and aspect. These are all great investments.”
Final critical things to note when looking at your first off the plan apartment:
- If you’re buying because you’re being sold on rental returns, it’s a clear case buyer beware
- If a developer slashes prices to sell, you have to question why as there could be an issue
- Forget rental returns; focus on what you think the property is worth rather than what you’ve been told