Buying Off the Plan - Tips and things to look out for

mooki24

mooki24

Hi everyone

I'm looking to buy my 4th property soon however the property I'm looking at is an OTP purchase.

I've been trawling through the archives and reading a LOT of horror stories which is making me extremely nervous. I haven't signed the contract yet luckily, so was wondering what things do you need to look out for / research BEFORE buying something off the plan? Has anyone had much success with these or would you steer clear?

Thanks
Mooks
 
For starters.....

  • Who is the developer - will they go bust or disappear with your money? Previous projects etc
  • Who is the builder? Fly by nighters or a reputable company with many previous projects you can look at
  • Inclusions - what is included? Curtains/Blinds, Lampshades, Doorstops, landscaping, telephone line are often not included. Confirm quality of floor covering.
  • You options if the project is delayed for half a century - can you get out and get your deposit back?
  • Have you got access to "emergency money" when the valuation of the finished property comes in 20% below purchase price? We worked on having 40% deposit "just in case".
  • Warranty conditions for buildings and fittings - when stove tops and hot water systems stop working after 1 month, or there's a leak behind the shower you discover a few months later when the plaster collapses
  • YOUR (not THEIR) estimate of body corp if one exists- yes you may need to go and do your home work on how much things like common property insurance, maintenance/repairs (buildings, lifts and amenities - include things such as car park line repainting, resurfacing of common area, pool maintenance), power/gas (for common area lighting, lifts, pool heating, general heating/cooling, security etc.

The Y-man
 
the thing is with OTP here in australia is that generally they go down after completion for apartments. But many buyers particularly asian buyers with minimal knowlege on australia conditions would go for these kind of OTP as in asia people who generally buy OTP see their investment go up upon completion and it is seen as the first in best deal kind of mentality.
 
Thank you all for your quick responses.

Aaron_C - Have just sent you a PM with the details. Not sure if I should post the specific details on the forums (?)

The Y-man - That is a very good list of questions to start with, thank you.

Melbournian - That is my biggest fear.. although I have known a few friends who have been successful with OTP's, I'm worried I won't be so lucky. Especially reading a lot of forum posts on here recently where the valuations come in a lot lower. I'm worried I might be paying a bit above market rates already so to have it valued low would not be cool...
 
just depends - certain areas where migrant demographics go in - the prices go up. like the one in glen waverley - just next to the train station. there was an article in the age about it. they basically nearly broke the sales window to get in. The same would occur too if the tower in box hill was build.

I don't think there is anything wrong to diclose where this OTP is. - you're just asking opinions on whether it is a good investment etc.
 
Just searched for that article and found it Melbournian, very interesting.

The apartment is a 2 x 1 in St Kilda btw :)
 
Just searched for that article and found it Melbournian, very interesting.

The apartment is a 2 x 1 in St Kilda btw.
 
I would not pay $555,000 for a 2x1, whether that be in the Melbourne CBD or St Kilda. I think 1x1 and 2x1 are the worst things you can buy because there are simply so many of them....hence they fail to attract the premium price or demand that an extra bathroom will bring.
 
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