anyone got experience with buying off the plan ?

for example this one

http://ninemsn.domain.com.au/Public/PropertyDetails.aspx?adid=2007517919

how much do u really save on stamp duty ??

are there any hidden costs ??

There is much previous discussion about buying off the plan (OTP).

Yes, you do save stamp duty, BUT in my opinion:

1. you pay a premium for them in any case which erodes your savings
2. the bigger the project, the more money you pay to project managers, builders, agents etc.


There can be other issues such as delayed settlements... see http://www.somersoft.com/forums/showthread.php?t=48534
and getting necessary loans (especially if the market drops between time of your signing and settlement).

For example, you might sign for a $500k OTP deal, looking to fianance 90% ($450k). However, let's say the property market takes a bit of a beating, and by the time the building is complete, the bank valuation comes in at $400k. They will now only lend you $370k, so you need to come up with $130k to settle (instrad of just $50k)

Further, for unit developments, owner corporation/body corporate fees are not struck until completion, and may be thousands of dollars per year more than forecast by the agent.

So, if you are going ahead with an OTP purchase,
1. negotiate the price heavily
2. be prepared for low bank valuation
3. be prepared for higher than expected outgoings (if applicable)
4. be prepared to wait for completion

Cheers,

The Y-man

We bought half way through building on a house in Victorie, it went horribly bad, we lost a lot of money because of the builder finishing the house very cheaply, in the process breaking a lot of building codes. We would NEVER do it again. Unless you know the builder is a very good one, be very careful

this is our story here

Also, see my previous posts

Apparently, there is no stamp duty saving here in S.A

Have done three off the plan over the years.
One ( 3 bed apart) was a total crap-fight from go to woe ..and lot's of woe.
One ( 3 bed townhouse) was OK ... but builder has NEVER honoured any warranty. Once he had the money ...see ya later mate.
One ( one bed CBD apart) was reasonably OK ...it worked.

I would NEVER do it again. NEVER. The neg's and complications ( contracts, specifications etc) totally out weigh the savings.
LL

some scary experience there sorry to hear about that, i've read numberous other forums about builders OTP and most ppeople have problems, major problems... but that does not seem to deter people from buying OTP like its hotcakes here in adelaide...

thanks for the feedback, its better to be safe then sorry

I'm not sure who's been buying OTP like hot cakes here in Adelaide. I know people in the industry and they are doing it tough. Not much hot cake action going down.
Choosing the right builder, with a good track record seems to be the way to go. Urban Construct and Multiplex are among the best, from the feedback I've received.
The other issue you can run into OTP purchases is that valuations can be problematic. In a new development, where similar apartments aren't available for comparison, some banks won't touch them as they can't get a "market" value to work with. I've know people who have come unstuck near settlement time for this very reason. Lots of sleepless nights.
On the other side of the coin, there is someone (can't remember who) on this forum who specialises in OTP apartments and has done very well with that strategy.

OTP, at best, are for rapidly rising markets. Certainly not for stagnant or falling ones.

atti said:

major problems... but that does not seem to deter people from buying OTP like its hotcakes here in adelaide...

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I think when you're a wet-behind-the-ears novice OTP all looks so inviting...and that's what the developers and marketers play on. The brand new slick display suite finished to perfection ( better than you'll get in the real thing..), the trendy designs and finishes, the sales people swanning around ( who just aren't there and don't care after the sale is sealed), perhaps the "seminar" that "proves" the experience of all involved, the architect, the builder etc etc. Of course, this is a "never to be repeated opportunity" ... And then there's the "plan" showing 25% all sold ....before you even get there. ahh, they do it sooooo well !
But buying new property, OTP or other wise, is usually not a good profit earner in my experience.
LL

this otherone i am looking at, they actually sold 70% already and its on pirie street btw if anyone interested.

atti said:

this otherone i am looking at, they actually sold 70% already and its on pirie street btw if anyone interested.

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Presales are almost always exaggerated by tricks like "selling" some of the units to a related company of the developer.

Yeah, they need a fairly high percentage of pre sales to get the next round of financing to keep the project moving. So, they often manipulate the pre sales in order to get buyers motivated to buy, so they actually get the pre sales, then they get their money. If they don't meet the pre sales target, then the bank turns off the money tap and the project hits a brick wall.
It's an interesting business.
I know someone who bought an apartment post completion for $50,000 less than the OTP price. SO much for the huge savings to be made buying OTP

I have experience buying properties at a significantly reduced rate (up to 30%) from what the original owner paid off the plan a few years earlier. Does this count?

As other have said, be seriously careful with buying off the plan. There are a lot of factors which cause people to pay way too much using this approach (as the resale figures show).

atti said:

...sold 70% already....

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..let 'em have it . All that glitters is MOSTLY not gold ! Read Jan Somer's books and make yourself some real money!
LL

i need to get myself a copy of these books, i am reading most of my stuff off forums and articles (online)... i think i'll stick to "REAL MONEY" in terms buy something already established, too risky in current market for OTP.

aparts i see alot going up forsale thats why its probaly good time to get 10-30% off advertise price keep trying...

lol anyone ever made an offer in writting and the real estate agent looks at you like your a tight **** ? i hate that look

atti said:

lol anyone ever made an offer in writting and the real estate agent looks at you like your a tight **** ? i hate that look

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Lol I have REAs so offended that they wont talk to me. I am super polite but my offer was 'super insulting' apparently. And that was only 10% below market.

Get to know the area and the man

We tend to get good results when we (a) get to know the area ( so YOU know a bargain when it does come up ( read Jan's books..) ) and then (b) get to know your REA ( I mean the actual person ....lunch maybe ??) so he can maybe advise you when the buyer is "keen" and perhaps looking for clean, cash, unconditional offers. When we find this combo, we tend to buy multiples in that area. Works for us !
LL

atti said:

i need to get myself a copy of these books

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Darn right you need those books. Forums are fun, but read, read , read.
LL

atti said:

this otherone i am looking at, they actually sold 70% already and its on pirie street btw if anyone interested.

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If the development is good, and you want a piece of it, wait for completion, and be ready to rescue some people who are having trouble settling, and are needing to flip.

Cheers,

The Y-man