\nMany, many people are drawn to the glossy brochures of the new developments, wanting to get into a brand-new apartment, but there are some things you need to consider if you\u2019re going to be buying off the plan.\u00a0In today’s show we get another warning about buying off the plan from a market commentator,\u00a0Rachel Barnes<\/b>, from\u00a0Investor Friendly Agents.
\n <\/p>\nTranscript:<\/h4>\n
Kevin:<\/b>\u00a0 Earlier in the show when I was talking to Carolyn Boyd, we mentioned about the number of people who are now buying units, opting to live in apartments, and there are a lot of reasons for that, of course. There are budgetary reasons, but there are also lifestyle reasons.
\nMany, many people are drawn to the glossy brochures of the new developments, wanting to get into a brand-new apartment, but there are some things you need to consider if you\u2019re going to be buying off the plan. Many people will warn you not to do it.
\nRachel Barnes is a market commentator. She also has a website called Investor Friendly Agents, working with agents who want to work with investors. Rachel, I\u2019m keen to get your take on this, on what advice you\u2019d be giving to people who are considering buying off the plan?
\nRachel:<\/b>\u00a0 Thanks, Kevin. I\u2019d say buyer beware basically \u2013 whether you\u2019re an owner-occupier or you\u2019re going to be an investor. Generally, I deal with investors, so that\u2019s where a lot of my feedback comes from.
\nOne of the things I find is that first of all, there\u2019s a price that you\u2019re getting in at, because it depends how you\u2019re buying the property. If you\u2019re buying direct from a developer, it\u2019s normally not quite so bad, but there are a lot of people in between these days, and it\u2019s that in-between where you can pay anything up to at least $50,000 extra for a property than if you had gone direct. There are a lot of commissions to be made for people in this type of environment.
\nKevin:<\/b>\u00a0 Is it a matter of doing your homework and make sure that you\u2019re not going to be paying over the odds, even if it is new and nice and bright and shiny?
\nRachel:<\/b>\u00a0 That\u2019s the thing. If you\u2019re an owner-occupier and even an investor, sometimes you get a bit emotionally attached because of those brochures. But let\u2019s get back to the facts. The fact is if you\u2019re buying an apartment, you have to firstly be careful of how much you\u2019re paying, as you say. That\u2019s going to be one of the key things.
\nSecondly, what\u2019s going to happen with that property? What are the body corporate fees going to be? Who\u2019s going to be managing that? What\u2019s the cost involved in that? Is there going to be a sinking <\/b>fund? You need to know all those sorts of details.
\nOn top of all that financially, if it\u2019s investors, for example, and you\u2019re going into it with, say, 50 other people who are going to be buying at the same time, how many people are going to be putting their property on the same rental market as you? You\u2019re going to be competing basically on price, because there\u2019ll be no difference in other parts of that complex.
\nKevin:<\/b>\u00a0 By definition, buying off the plan means you\u2019re buying off a plan. In other words, it hasn\u2019t been constructed at that time, and you have to take at face value a lot of the assurances given to you by the developer as to what the finishes are going to be like, as well. I\u2019ve seen a lot of people come unstuck in that area, Rachel.
\nRachel:<\/b>\u00a0 Absolutely. Remember, what you see in a glossy brochure is just the artist\u2019s impression. What you actually get can be completely different. That\u2019s where it\u2019s sometimes a lot safer to look at something that\u2019s existing, because you know what you\u2019re getting. When it\u2019s off the plan, the developer could go bad; they could cut back on some things that they hadn\u2019t intended to or that they did intend to, which is even worse.
\nYou never really know who you\u2019re going to get or what you\u2019re going to get. You have no idea what your neighbors are going to be like, and that can be a huge concern sometimes.
\nKevin:<\/b>\u00a0 I do feel sorry for people who look at developments, have absolutely fallen in love with it, and have made the decision to buy it. What are some of the things that they can do to make sure that they\u2019re not falling into any of these traps?
\nRachel:<\/b>\u00a0 One is just to confirm with the person who\u2019s selling it to you, are they a seller\u2019s agent? Are they getting sales commissions? Let\u2019s get some transparency here. Exactly how much are they making on this deal? Because some of them don\u2019t have to tell you, and they\u2019ll just say they\u2019re receiving commission. You want to know exactly how much.
\nIf you can talk to the developer, that\u2019s even better, or find out \u2013 through perhaps RP Data \u2013 what\u2019s been sold in that area so you get a bit of an idea about whether that\u2019s going to be a reasonable price.
\nJust to give you an idea, I know some overseas investors pay a price for an apartment that may be inflated even five years down the track, because they don\u2019t know what they\u2019re buying, and they don\u2019t know what the comparison sale would be in that area.
\nDoing your due diligence on the area is going to be crucial, as well. Have a look around and see where they\u2019re up to in comparison with where they should be. Find out more about the developer\u2019s history. Have they done a lot of developments? Have they got some good groundwork behind them? Are they reputable? That\u2019s some of the due diligence you can do even before the property\u2019s been built.
\nKevin:<\/b>\u00a0 That\u2019s great advice, Rachel. Rachel\u2019s website is Investor Friendly Agents, helping agents work better with investors. That\u2019s who we\u2019re talking to right now. Of course, Rachel is a market commentator, as well.
\nRachel, thank you for your advice, and we\u2019ll talk to you again soon.
\nRachel:<\/b>\u00a0 Fabulous. Thanks, Kevin.<\/p>\n","protected":false},"excerpt":{"rendered":"
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