When investing in off the plan property there are a number of benefits which make doing so an attractive option in the current market place. It is common to pay less for an off the plan property than for one that has already been built. The investor can therefore make a saving when purchasing ‘off the plan’ as it makes sense for the developer to offer a good deal and therefore complete contracts for the building as it reduces the monetary risk that would be associated otherwise.
One of the biggest savings associated with buying ‘off the plan’ is the reduction in stamp duty. The lower stamp duty only applies in Victoria as the duty is calculated based upon the value of the land that the property resides on, and not a combination of the land and the property as at the time this is done there is no property and simply the land that is a signal of the purchase and therefore relevant to the stamp duty.
The cost of purchasing the property is based around the current prices when the contract is drawn up. By the time the building has been built the value of the property could have risen, which would mean that the investor can make significant capital gains before even renting the property to possible tenants or selling it, depending on what way seemed best to maximise profit from the purchase.
The length of time before completion of the property means that after having paid the initial 10% there is a long time before finalising the payments and this time gives the investor a chance to organise their finances in relation to any other investments.
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