Buying property off the plan means entering into a contract with a developer to buy a property before the completion of construction. Since there is no physical property to inspect or see, you view the design, building plans and pictures to get an idea about what the property will look like on completion.

The contract of sale for any property should spell out what you are getting for your money. It is prudent to get your legal adviser to take a look over it before you sign it.

Usually the sales contract requires you to pay an initial 10 percent deposit of the purchase amount, which is held in a trust account. Then on completion of the construction, you must pay the balance and take possession of your new property.

An off the plan contract is drafted slightly differently from a standard property contract for obvious reasons – there is no physical property to exchange yet.

What is covered in an off the plan contract

It is important to check that the following things have been included in the contract:
▪ Adequate plan disclosure

In an off the plan contract, a developer is required to include plans, specifications, and timeline of what they plan to construct as the final product. It is important to review these plans so that you are satisfied with the level of disclosure and the standard of the finishes.
▪ Cooling off period

In most Australian states, a cooling off period of two to three days applies to an off the plan contract, which means you are free to alter your purchase decision during this time. Try to find out if there is any termination penalty if you decide to withdraw during this time. Remember, you are legally bound to buy the property when the period ends.
▪ Finance

Before buying off the plan in a new property development make sure you are fully aware of your financial position. If you are planning on borrowing money from a lender to buy your property make sure you check with them about how they treat off the plan sales. Most lenders have different policies and ways of dealing with off the plan sales. Check with your lender if you can get approval for financing before the completion of the project.
▪ Stamp duty
As a buyer, you must pay stamp duty on your property within the required time period. Check if you are eligible for any concessions or exemptions available to those who buy residential property. You may need to get some legal advice on how much you may need to pay or what discounts you could be eligible for. Further information about stamp duty discounts in Victoria can be found on the State Revenue Office website.
▪ Inclusions and warranties
Inclusions are basically all the things that will be included in your property when it is finished. You don’t want to buy a property off the plan and then find out it doesn’t include doors or windows! An inclusion list will cover all the things that will be built into your home or as part of the development. Common things are the type of doors, floors, benchtops, cupboards, paint colour, door handles, oven and much more. Make sure you are clear about what you are paying for and what you will get. You also need to confirm what warranties you might be covered by. In Victoria, a newly built home comes with a three month period where defects will be corrected. This might be doors that stick, windows that don’t close properly or other things that pop up after you move in. The house will also be covered by a builder’s warranty, so if there are serious structural problems you can get them fixed.
▪ Completion
The contract should identify the estimated time when the property should be completed. Make sure you understand what happens if there is a delay or if the project gets cancelled. If the project gets cancelled you should get your deposit refunded. The developer is usually able to cancel the contract if the plan of subdivision can not be registered within a specified period of time, commonly between 18 months and 3 years from the day of sale.

You should also be aware the timeframe for settlement once the property is ready for you to move in. Usually it is 14 days after completion.

When buying off the plan, it is important to closely review the contract details to make sure you understand exactly what you are signing up for, and also that you get what you pay for when the property is built.

While investing in property is smart and rich people do it all the time, it does carry fear for many people. It is understandable given the large sums of money involved, it is a big purchase. However, these fears can be overcome with some research and good advice, and the financial rewards can be significant.

Do you hold any of these common property investment fears?

1. Buying a dud property – nobody wants to buy a property that does nothing but cost them money, time and fuels their anxiety.

2. Buying in the wrong suburb – who wants to invest in an area that offers no capital growth, low rents and high vacancy rates?

3. Paying too much for the property – you get caught up in the emotion of buying a property, or the competition is fierce and you pay too much.

4. The property is expensive to maintain – the pipes keep bursting, the roof leaks, and there is no end of maintenance required to keep the property functioning.

5. Missing out on the rising market – the value of properties keeps going up but you are stuck on the sidelines missing out on the gains (because you don’t know how to get in safely).

6. Not having enough time to find deals – you like the idea of investing in property but you don’t have time to research suburbs or figure out the numbers.

7. Low tenant demand in the area – how can you be certain there are enough renters in the area to warrant an investment property?

8. Buying a poorly located property – no shops, transport or amenities within walking distance, so who wants to live there?

9. Dealing with stressful auctions – bidding at auctions is stressful and prices go way over my budget anyway.

10. High owners corporation fees – what about all those fees to hold properties like owners corporation fees, aren’t they excessive?

For most people fear simply holds them back from investing

Rich people have overcome these fears by gathering good information, acting on it and using real estate to further grow their wealth and provide income. So what if you could find a property to invest in that ticks all the boxes, would you go for it?

If the answer is yes, then we suggest you speak with one of our agents today as a two bedroom townhouse at Paperbark Place could be just the property you are looking for.

To find out more call Tony Smith on 0411 424 964 or email tonys@maxbrown.com.au

Watch this simple video to understand the four simple steps of buying property off the plan. This is the third of a video series covering the essentials of what is involved in buying property off the plan.

These videos will help you get a jump on other property buyers and investors, and learn how to save thousands of dollars in the process.

The full series of videos cover:

1. What is buying property off the plan?
2. Some of the risks in buying property off the plan
3. The four simple steps to buying property off the plan
4. Financial considerations and deposits
5. Buying in a multi-unit development and inclusions lists
6. How to make stamp duty savings
7. Understanding owners corporations.

Watch the video now.

If you are looking for a 2 bedroom townhouse with secure garage and close to the shops, train and everything you could need, then check out this delightful property. Including 2 bathrooms you could share with a friend and get started on the property ladder.

Watch the video below to see more about this 2 bedroom townhouse in Mooroolbark.

Check it out here: http://www.realestate.com.au/property-townhouse-vic-mooroolbark-119853953

Act fast so you can take advantage of stamp duty savings before construction starts in August.

Our recently released three bedroom, 2 bathroom townhouse in Mooroolbark ticks all the boxes for smart property investors looking to add a quality property to their portfolio.

Here is an opportunity to beat the rising market in an area with:

– strong capital growth of 9.5% over the past year
– rental vacancy rates are below 1%
– good rental yields around 5%
– and current expected rental return of $400-420 per week.

Save more than $20,000

Buying early and off the plan means there is no stamp duty costs, so a massive saving of more than $20,000. Plus you also have the opportunity for capital growth before settlement.

There is also the benefit of capitalising on the full depreciation schedule of a new property.

You could buy this in your self-managed super fund and watch it grow your asset base.

The townhouse is close to transport and shops, and will appeal to a broad range of renters – from retirees with grand kids that may stay over, families and house sharers.

Close to all the local amenities

Everything you could want is an easy stroll or short drive away, including Mooroolbark train station, shops and cafes, gym, swimming pool, parks, golf courses, sports clubs, Maroondah and Ringwood hospitals, doctors’ clinics and health centres, kindergartens, primary and secondary schools, a Swinburne University campus in Croydon, and transport links like Eastlink and the Maroondah highway.

This one ticks all the boxes.

Run it through your calculator now and act quick to add this to your portfolio.

Contact Tony Smith at Max Brown Real Estate on 0411 424 964 or email tonys@maxbrown.com.au

See our full listing here http://www.realestate.com.au/property-townhouse-vic-mooroolbark-119603499

The latest advice from one of Australia’s leading superannuation industry members is that Australians who believe $1 million is enough for a comfortable retirement are in for a rude shock.

Superannuation industry veteran and chairman of retirement income at Challenger, Jeremy Cooper, said if the typical $1 million nest egg was used to buy a lifetime income in the current interest rate environment, it would get you about about $1297 a fortnight – the same as the government pension.

“Assumptions and assertions that $500,000, or even $1 million, in super, in the current environment, will guarantee a comfortable retirement are suspect,” said Mr Cooper, chairman of retirement income at Challenger.

“The brutal reality is that a fair price for an age pension in today’s interest rate environment is around $1 million. For that amount, a couple will get $33,717 of income a year. A comfortable retirement would cost more.”

Current low bond and interest rates would severely affect the returns of investors, many of whom are preparing for a lump sum windfall instead of steady income.

This follows on from a University of Melbourne report last year which indicated nearly half of Australians would run out of super within 10 years of retiring and be forced onto the government pension, leading to a drop in lifestyle and income security.

Rich people invest in property

This is why rich people and smart investors look to property to grow their wealth and provide an appreciating asset that delivers an ongoing income stream.

Many people are using the capital in their super funds to invest in property and get more money from their fund for their retirement.

Why not invest in one of the great value townhouses we currently have for sale in Mooroolbark, a fast growing area of outer eastern Melbourne. This is one of the strongest performing parts of the Melbourne property market.

You can pick up an investment property returning good rental yields, in an area with very low vacancy rates and strong capital growth prospects.

More detail about the investment opportunity can be found at www.fastlovehomes.com.au/invest and you can download a copy of our assessment of the return on investment from a two bedroom, two bathroom townhouse.

We have already sold 25 percent of stage 1 so interested buyers need to act quickly.

If you would like to secure one of these investment grade townhouses please contact Tony Smith from Max Brown Real Estate in Croydon on 0411 424 964 or 131 629, or email tonys@maxbrown.com.au

A common trait of wealthy people is that they own real estate. They don’t rely on shares alone to maintain or grow their wealth, they look to property. But for many people investing in property seems risky, scary and just too hard.

But it should be a part of your wealth accumulation planning.

Wouldn’t it be great to have another asset that produces income for you while you are alive, and then something you could pass on to your children or family in your will?

Investing in property can provide security and freedom

Real estate is an asset and wealthy people own assets that produce income. It’s one of the smartest ways to make money. Where else besides property can you buy an investment with a 10 percent deposit and have a renter pay off the rest of the investment for you?

Wealthy people own real estate because it is an ideal investment that provides:

1) passive income/cash flow –  it can provide a foundation for positive monthly cash flow and permanent passive income. The moment your rents exceed your monthly expenses you have cash flow. There is no limit on the amount of years that you can collect rents on any given property.

2) appreciation – over time property values generally rise. As Australia’s population expands the demand for property will increase, and demand drives appreciation. This is happening now.

3) tax advantages – there are huge deductions available to investment property owners. You can claim for a whole raft of things like advertising for tenants, owners corporation fees, council rates, land tax, depreciation, mortgage interest and borrowing fees. Even losses are tax deductible.

4) leverage – using someone else’s money to buy an appreciating asset is a smart move. By using the bank’s money you can leverage your own resources, and in a low-interest environment where your property is growing in value, coupled with a renter helping to pay your loan, you can let time and appreciation work for you.

Check out this property investment opportunity

If you are thinking of investing in property then take a look at our video on buying an investment property in Mooroolbark at Paperbark Place. The opportunity is exciting.