Buying off Plan question

[Aaron_C]

I still dont think its a good reason for you to put the builders children through private school.

How ignorant of you, honestly. No one is allowed to make a profit from building a property? Isn't that what property investors are doing? Or am I confusing your profit-driven motivations with some higher sense of altruism?

 

[Tony3008]

Its [25-year management contracts] still legal so far as I am aware but happy to be corrected.

Sort of legal, but my understanding [IANAL] of the Arrow Asset Management case (NSW 2007) (Google Arrow "body corporate") is that where a developer enters into management contracts before settlement any monies paid for such rights have to be passed the Owners Corporation and also that if the developer is making such contracts pre-settlement he is acting as the OC and so is subject to the general obligations on OCs to act in good faith and for the good of the owners. It is hard to see a 25-year binding contract being of benefit to owners.

 

[boomtown]

Tony nice one will have to look into that one some more.

 

[atsim]

I've bought two properties off the plan (neither was a good buy) and in each case the deposit has been lodged with the developer's solicitor to be released at settlement - no risk of losing it AIUI. The plus is that if you're an early buyer you get to choose where in the building you are (aspect/level/layout etc) but there is the risk of spec changes (the contract probably allows this) and OC fees are an unknown.

My PPOR was built by a Queensland developer who locked the OC into very expensive 25 year contracts which he sold on pre-settlement. I think this is now illegal but better to buy an established property where the outgoings are known.

I bought otp in april 09 for $385k, settled nov 09 and sold nov 2010 for $450k. I also bought OTP nov 09 $531k with stamp duty concession, settled dec 2010. Current value $620k-640k with 6% yeild.It comes down to timing and knowing the market your buying in and also checking the developers track record

 

[boomtown]

I would say your experience is unlikely to be typical.

 

[Lamingtons]

Well... I just had a friend call me almost in tears. They are at the stage of finally signing the finance for the inner city OTP. I am talking less than 3km from the city and not St Kilda road where there are many multi level high rises apartments. I was also surprised to hear that valuation came in $50K+ less than contract price. They anticipated a drop but not by that much. I believe it was signed a year or 18mths ago. I had to assure them that mortgage insurance is not a bad thing and their incomes had grown incredibly in the last 18mths and are DINKs.
Now is it bad that I am stalking REA.com.au for listings in the same block from people who cannot settle?

 

[Aaron_C]

Now is it bad that I am stalking REA.com.au for listings in the same block from people who cannot settle?

But wouldn't the same thing happen to you? (low valuation)

 

[Lamingtons]

But wouldn't the same thing happen to you? (low valuation)

Yeah, unless it is at a really reduced price.
Sorry just one of those things that you randomly think of when you hear things like this. oooh i wonder if there are any bargains.