1 June 2015

6 Easy steps to off the plan investment success

Buying Off The Plan

6 easy e-steps to Off the Plan investment success

Off the plan property development is leading a residential construction revival across Brisbane, as the housing sector continues to woo increasing numbers of self-funding retirees with the luring siren song of low interest rates.

OTP property has copped its share of criticism from within and without the real estate sector. As with any investment bought and sold as a tradable commodity, this is an area that can be exploited by those looking to turn a quick buck, and incorrectly adopted as a retirement strategy by ill-advised, inexperienced investors.

As such, we end up hearing a lot of negatives about OTP investment, with all developments and developers subsequently tarred and feathered with the same brush.

Just as some properties make better portfolio acquisitions than others however, not every OTP property investment is created equal, with the potential for vast differences in the 'invest-ability' of different projects.

So how do you navigate what is seemingly a minefield of unanswered questions and untouchable developers?

As with all aspects of building a viable retirement portfolio, the foundation for success is in becoming an educated and empowered investor, starting with these six easy E-steps.

1. Education

Are you aware of the many variances in opportunities around OTP investment and the fact that every project is guided by its own set of unique fundamentals, including planning regulations, project design and execution, developer expertise and finance?

These are all aspects of OTP investment that investors would do well to understand, because when you have greater insight into the potential upside and downside of any investment, you can assess whether it will work in your portfolio and the best approach in making that acquisition.

Speak with advisers who have a demonstrated depth of knowledge in their market, including a proven relationship with trusted, local developers who work transparently with all parties to the process.

If your 'adviser' seems recalcitrant when you request a face to face with the developer of a product they're recommending, without any real assessment of its relevance to your specific investment goals and strategy, it might be time to cut and run.

You need to recognise the difference between a well-rounded education on which to base your OTP property purchase, as opposed to a 'hard sell' from self-interested spruikers, who entirely neglect your personal needs and circumstances.

2. Expectation

Once you have a sound understanding of OTP investment and all it entails, it's time to evaluate this potential addition to your property portfolio.

Will it meet expectations as an acquisition that supports your overall cashflow and capital growth position, as well as your personal risk profile as an investor?

Remember, any type of property must tick all the necessary boxes before you consider buying it for investment purposes. This is about facts and figures, not warm fuzzy feelings.

Crunch the numbers and then crunch them one more time.

3. Evaluation

Seek some form of professional counsel when it comes to the financial and legal aspects of any OTP deal, prior to signing on the dotted line.

These areas can be problematic when approached without the right type of understanding. As such, investors risk falling victim to poorly executed contracts and loan arrangements that simply aren't up to scratch, in deals designed to line the pockets of faceless, greedy developers.

4. Empowerment

All property investment is not without its potential issues. For a start, building a viable retirement portfolio requires a substantial injection of equity - be it as cash savings or from within your own home.

Surely therefore, you want to remain in the driver's seat throughout the asset selection and acquisition process, with the appropriate guidance from suitably qualified experts as required.

All too frequently though, investors abdicate control to a slick salesperson and can end up in messy ownership or finance structures as a result.

With the right education, you can empower yourself around the entire OTP process and make informed decisions at each step of the way, from initial deposit to signing contracts and financing and settling the transaction.

5. Engagement

We introduce our clients to the developers of a prospective OTP property prior to purchase, and invite them to view a number of completed projects.

These are, when all is said and done, the people who will project manage your investment, ensuring completion on time and to budget. They assume responsibility for a large chunk of your life savings, so why wouldn't you want to know whom you are entrusting with such a significant responsibility?

The developer and their past projects are the only real reflection of a product that you're being asked to purchase sight unseen. Getting to know their work and approach will give you a better idea as to what you can expect from your own OTP acquisition.

6. Execution

The final and most critical step is identifying the perfect project to align with your needs and objectives as an investor.

Contrary to what mainstream media might suggest with stories about OTP apartment oversupplies and such, not all of these investments are stock standard generic monoliths, as explained in our article,9 of the most common off the plan property myths…debunked!

Many boutique developers offer investors the opportunity to purchase OTP, thereby enjoying significant stamp duty savings and the rising values of our current fast moving markets, in smaller scale, landmark developments.

These architect designed medium density projects are becoming icons of popular inner urban living and challenging misconceptions around a sub-sector of the residential real estate market that reflects changing attitudes to how and where Australians choose to live.

If you would like to know more about the right kind of off the plan investment for your property portfolio, please click here to read more.