Buying off plan apartment inner city

[chazraz128]

I am looking at buying an off plan apartment in Brunswick. As this is my first venture into off plan investment, what are your thoughts on this? By just looking around this suburb, I think there is some potential. Do you consider $550k for a 2 BR apartment expensive?

 

[Tony3008]

General advice here on OTP is don't. But there are exceptions. For starters, how big is this apartment, how many in the development, and what do comparably sized and located ones sell and let for?

 

[shab]

Hi chazraz128,

Have you read through all of the other threads on the pros and cons of buying OTP? There is some good information in this recent thread:
http://somersoft.com/forums/showthread.php?t=99357

I think the main risk seems to be that the valuation that gets done when the property is completed may fall short of what you base your loan application on. If this happens, it could leave you short at settlement time as the bank won't lend as much against it as you expected. And if that happens, you'll have to find a way to make up the difference.

 

[Jamie M]

Hi chazraz128

What size deposit do you have to contribute?

There are many issues to consider when purchasing OTP - and there have been quite a lot of posts on SS that you can read up on.

Having a sizeable deposit can help mitigate some risk.

Cheers

Jamie

 

[Colin Rice]

As shab has stated above you need to have a contingency in place and almost assume the final val will be short.

Either access equity in existing property or have cash buffer available before settlement to make up the shortfall.

Good idea to check similar established property in the surrounding area to see what they are/have sold for recently.

Not to scare you but recentley saw a current affair article where a Sydney couple purchased an OTP 3 years ago that had increased in value considerably due to market upswing.

The developer changed the plans and as a result they where offered an unsuitable property within the complex that was worth a lot less. They had to pull out and did get their deposit back but it was not enough to buy a suitable property due to the market upswing not to mention the higher loan amount required to purchase a similar property.

Sometimes you can have a win and the val is higher than purchase price but best to be prepared for the worst.

 

[AusPropertyPow]

I am looking at buying an off plan apartment in Brunswick. As this is my first venture into off plan investment, what are your thoughts on this? By just looking around this suburb, I think there is some potential. Do you consider $550k for a 2 BR apartment expensive?

I would suggest not to purchase OTP in Melbourne as the apartment market there is becoming very oversupplied. You do need to be very carful when purchasing OTP and the type of building, the area and timing needs to right. Don't buy into a complex that is too big and buy in an area which is at the bottom of the market or just starting the upswing so you can get some growth prior to completion.

Check out this short article in regards to buying off the plan.

http://auspropertypowwow.com/buying-off-the-plan/

By the way, I have currently got an OTP plan property occurring in Brisbane which I think is the best market to be doing something like this in at the moment.

Hope that helps. Good luck with it.

 

[imbi3]

apart from the valuation risk, for me it would be getting a finance when the property is ready. your financial situation may have changed dramatically when the time comes to settle

 

[Spades]

Hi chazraz128,

Look at what's on offer in brunswick via rea dot com.

There are some quirky units and edwardian places on offer.

You need to think can i offload it,if circumstances change.

Cheers Spades.

Ps.Btw AusPropertyPow,link in your sig is suffice,no need to self promote.

Drop the links in your thread.