After all, it seems logical that if you sign a contract to purchase a property at today’s prices, it should be worth more when construction is completed one to three years time.
There are many other benefits of purchasing property off-the-plan, some potential pitfalls you need to be aware of and also some essential due diligence checks that should always be carried out.
Advantages of buying off-the-plan property
1. A better price
Everyone likes to save money. When developers first offer their new project to the market they tend to start with lower prices to meet pre sales targets.
Once these targets are achieved construction starts, and now that the developer has met their construction finance requirements, prices may increase.
Therefore, for investors who commit early to the project there is often a good price benefit.
2. Tax benefits
As with all property investment purchases, there are some significant tax benefits available.
These benefits are greatest when the property is brand new, because there is more tax depreciation available – therefore buying off-the-plan is a good strategy if you wish to maximise these benefits and improve your after tax cash flow.
Learn more about depreciation here.
3. Secure property at today's price
What this means is that while you'll pay a 10% deposit upon signing a contract (or use a bank guarantee or deposit bond), you don't have to pay the balance of the money until the property has been built, which provides buyers with time to organise their finances and / or to sell property without the need for bridging finance.