All investors should make a careful assessment of the project and units they intend to purchase. Typically, an assortment of similar projects will also be under construction at the same time, and they will have to choose one from the group.
In order to do this, they need to determine the way in which a particular project will stand out from the rest in regard to location, on-site facilities and appearance. They also need to consider several other issues—including the total number of units contained in a development, based on current demand, and the amount of competition for the category of property investments they want to make.
Note that buying a property and then reselling it before completion is a tax-efficient method of investing. By doing this, investors can avoid side-steps capital gains tax and property transfer taxes if they are willing to sell the property before the project is completed.
To reduce the risk factor in ordinary circumstances, a short-term investor should try to purchase the best unit available—a penthouse, a ground floor unit that has a private garden, or a corner unit—which sells more quickly than a standard first-floor unit. Many investors also consult with property investment companies before making a decision to benefit from their experience and expertise.
Short-term “flip” real estate investment properties entail more risk than other strategies, but if research and planning are not short-changed, an off-plan purchase in a viable Australian project can be a sound residential investment property that also proves to be highly profitable.
These projects are often based entirely on capital outlay. As a rule, off-plan transactions call for a 10% deposit and mortgages are unattainable with uncompleted property. However, this deposit can be borrowed with products such as bank guarantees or deposit power, or it can be placed in an interest-bearing account.
In any circumstances, investors must feel certain that they will be able to complete the purchase, should that become necessary, even when they use a buy-to-flip strategy. Also, mortgages in Australia are readily available on completed property, funding as much as 80% of the total price.
