Off the Plan in Port Melbourne

Hi,

I have been reading quite a number of posts about Off the Plan (OTP) purchases, in particular one good thread discussing this - link below.

Being new to this forum, my very first IP, and OTP; I hope I could get some of your thoughts on this, rather than just the ideal 10 year property prices double story from my financial advisers. I will be primarily using this apt OTP as IP and as a vehicle for CG to allow further buys.

I have been talking to two financial advisers who have been propagating IP's out in Port Melbourne. They had mentioned that they had looked at several prospective areas, namely Brunswick, South Yarra and Richmond. But still highly recommend Port Melbourne.

Some questions:
1 - Area; in this case - Port Melbourne, could it be an exception to South Yarra; or really no diff as long it is OTP?
2 - Price; the price is fairly steep but apparently it has fancy appliances and some city views (glimpse at best) - Miele (or equivalent). Mainly the location is the reason of the steep price. Based on the argument of CG, the higher the value of property the larger the growth (at least that's what the financial advisers say). Worth to further ponder upon, or just keep looking?
3 - Price; should I start at a lower entry point for my first IP? Maybe buy two cheaper IP's - diversify?

Details on this apt OTP:
$677,000 - 73 sqm (incl 5 sqm balcony), 2 Bedroom 2 Bathroom, 1 Car; 4th (out of 5) Floor, Facing City (North East), Body corp 200 per month, Bay street - its on the main street - close to Coles and cafe's.

Related forum: Off the Plan Property in Southbank
http://www.somersoft.com/forums/showthread.php?t=59616

Appreciate any thoughts !! Thanks !!
 
ask your financial advisor's how much commission they will get from the sale?

i have often been approached in my travels by developers and they offer 5% kick back if u put any buyers onto them.

On $677,000 that is $33,850, not very impartial advice!

i would never suggest anybody buy otp except in the rarest of cases.

saw a case the other day of a 1 bedder otp in Sandringham purchased in 2008 for $430k, val on completion feb 2011 $315k ......ouch!!!!!!!!!!!!!

won't be able to settle, so deposit is gone and developer could sue
 
Question before answers to your questions - Why OTP?

To be absolutely honest, this being my first IP, I think I have been too gullible in going with my financial adviser.

My financial adviser started by wanting to review my finances and mentioned that I am in good financial standing to get some IP's. And after several sessions, I must admit I pretty much jumped into the bandwagon.

The pro's being depreciation costs, blue chip suburb, today's vs tomorrow's dollars, out of pocket expenses being $200/ week (with a bunch of assumptions - rent, vancancy, depreciation, body corp, etc etc), and of course the 10 years double in value, etc etc.

Love to hear the con's to balance out all the 'spin' I have been getting.

Until today... when he showed me his 'short listed' property in Port Melbourne and that particular unit is literally shielded from the sun (both morning and afternoon) because that unit is concaved with two other protruding sides of other apts - imagine the design of 'H'. With the little knowledge that I know about properties, having no sun cannot be good ! That kinda rang some alarm bells.

So here I am (after some recommendations from my mates) trying to get a second opinion over what these financial advisers are telling me.
 
ask your financial advisor's how much commission they will get from the sale?

No idea. But you are most prob right about the 5%.

saw a case the other day of a 1 bedder otp in Sandringham purchased in 2008 for $430k, val on completion feb 2011 $315k ......ouch!!!!!!!!!!!!!

Nasty !! Strangely enough, Sandringham is where my financial adviser had bought into - an OTP as well. Would not want to get into this situation. But I would imagine location could be a factor?? Would Port Melbourne be any diff - or pretty much the same across board?
 
No idea. But you are most prob right about the 5%.



Nasty !! Strangely enough, Sandringham is where my financial adviser had bought into - an OTP as well. Would not want to get into this situation. But I would imagine location could be a factor?? Would Port Melbourne be any diff - or pretty much the same across board?

it is to do with price more than location.

otp tend to be grossly overpriced.

all that spin from your financial planner who is really just a salesmen is rubbish

better off off using a buyers advocate and paying 2% than in effect pay 5% (loaded into price) for a financial planner to sell u an ovcerpriced asset unlikely to grow in short term, ur goal is initial growth to build portfolio

go and buy something established with far greater growth prospects
 
Yeah I would be wary of a financial planner giving property advice. He really should have disclosed to you upfront that he was getting a commission - if not then he's in breach of his AFS licence.
 
Hi,

I have been reading quite a number of posts about Off the Plan (OTP) purchases, in particular one good thread discussing this - link below.

Being new to this forum, my very first IP, and OTP; I hope I could get some of your thoughts on this, rather than just the ideal 10 year property prices double story from my financial advisers. I will be primarily using this apt OTP as IP and as a vehicle for CG to allow further buys.

I have been talking to two financial advisers who have been propagating IP's out in Port Melbourne. They had mentioned that they had looked at several prospective areas, namely Brunswick, South Yarra and Richmond. But still highly recommend Port Melbourne.

Some questions:
1 - Area; in this case - Port Melbourne, could it be an exception to South Yarra; or really no diff as long it is OTP?
2 - Price; the price is fairly steep but apparently it has fancy appliances and some city views (glimpse at best) - Miele (or equivalent). Mainly the location is the reason of the steep price. Based on the argument of CG, the higher the value of property the larger the growth (at least that's what the financial advisers say). Worth to further ponder upon, or just keep looking?
3 - Price; should I start at a lower entry point for my first IP? Maybe buy two cheaper IP's - diversify?

Details on this apt OTP:
$677,000 - 73 sqm (incl 5 sqm balcony), 2 Bedroom 2 Bathroom, 1 Car; 4th (out of 5) Floor, Facing City (North East), Body corp 200 per month, Bay street - its on the main street - close to Coles and cafe's.

Related forum: Off the Plan Property in Southbank
http://www.somersoft.com/forums/showthread.php?t=59616

Appreciate any thoughts !! Thanks !!

i would not pay 677k for 73sqm living area. Plus, its OTP. I always thought OPT should be at a discount because they are much higher risk than established properties ( i.e. you are betting the developers will do their jobs, be completed on time,etc etc)- all the while no rent. Go for something a bit older and more established whioch is also larger for that price. Surely, there must be many in/around that area. You have some freedom if you have 677k to spend. Look at location, size, and features ( more bedrooms/bathrooms etc) the better- appeals to a wider audience and thus has a more higher correlation to CG (which i believe is your goal).

id avoid opt's- they are risky and unless priced well ( which yours isnt), they are not worth it.
 
Yeah I would be wary of a financial planner giving property advice. He really should have disclosed to you upfront that he was getting a commission - if not then he's in breach of his AFS licence.

Well this financial planner setup is actually a team of two - not sure if makes any diff. One of them is the financial planner, other one is the 'real estate agent'. So effectively, one will give the big check saying you can afford it. And the other will come along with a list of properties.

Plus, its OTP. I always thought OPT should be at a discount because they are much higher risk than established properties ( i.e. you are betting the developers will do their jobs, be completed on time,etc etc)- all the while no rent.

Prior to OTP completion, I only have to pay 10%, which can be in a form of bank guarantee (cash (or from another offset acc) to the bank which they then provide a guarantee to the developers). So exposure prior to completion is 10%, the remaining 90% will be upon 'settlement', which is when the building is ready.
 
Re Bigtone, eeew: Good point on the price guys. I was of the same view of the price but defintely good to have someone reaffirm it.

What are the general ball park prices for OPT - I mean are they generally higher than current market value (with the reason it being new, tax depreciation, etc etc)? If higher, what are the general percentage - if any?
 
It's generally higher price for OTP because the building is new...obviously a new building is worth more than an old building. Hence depreciation benefits, better rental etc.
 
Prior to OTP completion, I only have to pay 10%, which can be in a form of bank guarantee (cash (or from another offset acc) to the bank which they then provide a guarantee to the developers). So exposure prior to completion is 10%, the remaining 90% will be upon 'settlement', which is when the building is ready.

No different to a "pre-loved " property - you can put 5% deposit down if you want.

The Y-man
 
What are the general ball park prices for OPT - I mean are they generally higher than current market value (with the reason it being new, tax depreciation, etc etc)? If higher, what are the general percentage - if any?

30% mark up.

The Y-man

p.s. "Depreciation" = "loses value" :)
 
Yeah I would be wary of a financial planner giving property advice. He really should have disclosed to you upfront that he was getting a commission - if not then he's in breach of his AFS licence.


Yeah my mortgage broker was always panning me off to certain OTP developments. They get like 4-5K if the purchaser goes ahead with it. so always a hidden agenda.
 
Well this financial planner setup is actually a team of two - not sure if makes any diff. One of them is the financial planner, other one is the 'real estate agent'. So effectively, one will give the big check saying you can afford it. And the other will come along with a list of properties.
run and dont look back!! what a scam

actually if i can't talk u out of buying OTP tell me what u want to buy and i will go to developer and get 5% kickback and give u half back so at least u would only be getting ripped off by 20-25% then!

developers can't normally price discount because it will effect the valuations on the other units at competition even more so, instead they just make bigger incentives to the marketeers to flog the last few in the block

seriously for your first IP buy someone established and a bit cheaper so you can diversify earlier than one big purchase
 
If you want to buy OTP go straight to the developer. Avoid glossy advertising and ones that promise you Paris, New York, London lifestyle. Just buy into an honest, low volume, infill, boutique development... or avoid the run around and headache and buy established.
 
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