In Australia, we’re well accustomed to the practice of buying a ‘second hand’ property.
People are generally more comfortable and have greater confidence in purchasing a home that is already built, whether it be a home that’s only a few years old, or perhaps a few hundred years old.
What you may not know is just how advantageous purchasing your second property off the plan might be for your financial situation.
What does buying property off the plan mean?
Buying property ‘off the plan’ means you’re buying a property that hasn’t been built yet.
It can be a house, apartment or townhouse and deciding to purchase off the plan requires committing to purchase a property with only having visibility of the developer’s plan, designs and renders without there being a physical building to view.
Typically, your commitment to purchasing this property is a 10% deposit, with the balance of funds not due until construction is completed.
Depending on when you commit to the purchase and what stage the development is in, you will have to wait for construction to be completed, which often occurs over a few months, or can even take a couple of years – each project will always differ.
With construction at Fairlight now underway, the wait time isn’t that far away, giving you ample opportunity to contact our team to receive the latest updates and estimated construction completion date.
What are the advantages of purchasing your second property off the plan?
1. Secure your asset with a small deposit upfront
As we’ve just mentioned, purchasing off the plan only requires a 10% deposit in contrast to buying established which generally requires 20%.
This means purchasing off the plan can allow you to secure your asset and second property with a much smaller buy-in than alternative options.
It also means that expanding your property portfolio can be a faster more and more accessible option for you in comparison to deciding to buy established.
2. Time is on your side
After paying your 10% deposit you won’t need to pay anything until construction is completed.
Whether this is a few months, or more than a year, it’s a major advantage having time up your sleeve to continue saving and get your financial situation in order.
Time can also be advantageous to help you plan what you’re going to do with your first property. If you decide to convert your first property into a rental and live in your new apartment, you can use your waiting time to prepare your first property for the rental market.
3. Price
Another major advantage of buying off the plan is that you agree upon the purchase price before the building is completed.
There’s a likely chance that your property will appreciate between the time you commit to purchase and settlement.
Off the plan apartments can also be competitively priced and offer an opportunity to get into an inner-city location at a competitive price point.
If you purchased your first property in a less than ideal location or less popular area, purchasing off the plan can provide an ideal opportunity to relocate to an area that you didn’t think was within your financial reach.
For example, the Fairlight Apartments in Mosman Park are currently priced from $469,000 meaning that you have an opportunity to relocate to a prime suburb within the Perth property market, just minutes from Cottesloe at a mere fraction of the surrounding median home prices.
4. Stamp duty concessions
If the first property you purchased was already established, you’re likely to be familiar with stamp duty costs.
Buying off the plan in Western Australia can offer stamp duty concessions that can help keep more money in your pocket.
Currently, the Fairlight Apartments are eligible for the 75% stamp duty rebate, up to a maximum of $25,000 on your off the plan apartment purchase. This offer won’t always be available and comes with an expiration date which you can find out more about here. To find out if you can access this huge saving, we welcome you to contact us today.
5. Tax depreciation
Lastly, if you plan to lease out the apartment, buying a brand-new property off the plan allows you to maximise the tax deductions (available to you via depreciation) and improve your cash flow.
Taking the next steps to get into your second property
Once you’ve settled on the idea of purchasing your second home, you’ll need a plan of attack to make it happen. Below we’ve outlined some suggested next steps and things to keep in mind before undertaking this financial responsibility and making your dreams a reality.
1. Understanding your current financial position
Before purchasing your second property, it can be highly beneficial to get a grip of your current financial position. Dependant on your circumstances, this may involve speaking with your bank or an experienced broker. While banks can often work within rigid parameters, an experienced broker might help you unlock your property goals by offering unique financial solutions specific to circumstances.
Your lender should help you uncover the types of loans that are available to you, how you can restructure your existing loans, and how this might affect your rights and tax obligations. Take the time to become an expert in home loans, as buying your second home effectively means that you have decided to run a business if you plan to rent out one of your properties.
2. Finding the perfect property
Even if you recently purchased your first home, you should still research the property market carefully as its dynamic nature can cause fast changes in peaks and troughs. Prices can fluctuate month to month based on shifts in demand, supply and population growth which is why it pays to be across your research.
If your second property is going to be an investment, you will also need to consider the needs of your potential tenant, which requires its own research. Some locations and property types are more suited to the rental market than others.
The research you undertake should point you in the right direction of suitable properties in the right locations within your price range.
3. Speaking with an off the plan property expert
Once you’ve decided on the property development right for you, which very well might be the boutique Fairlight Apartments, we suggest sitting down for a meeting with an off the plan property expert.
Speaking with the property development sales team will help you navigate the options on offer as per your budget. Your dedicated off the plan expert can also help demonstrate slight differences in configurations that can make a big difference in lifestyle and potentially your asking price if you decide to lease the property.
4. Find out how you can access some incredible savings via grants and incentives.
It’s a great time to purchase off the plan. With so many grants and incentives on the table for prospective buyers, the market is prime to unlock some great savings and put yourself in good stead to reach your financial goals.
You can find out what grants and incentives will apply to your apartment purchase by speaking to your dedicated project sales team, or we have also produced a recent article entitled Understanding the applicable grants when purchasing a Fairlight Apartment which covers all criteria, application deadlines and financial incentives.
In Summary
There tends to be a lot of uncertainty around buying off the plan when in fact there are many upsides for prospective buyers. Financially, it has the potential to put you in a much better standing compared to buying an established second property.
If you’re still confused or unsure about buying off the plan, I encourage you to contact us today. Fairlight Apartments is backed by an award-winning team who have extensive experience delivering projects on time and on budget, so you can rest assured knowing you’re committing to a quality development that will satisfy all expectations.