Sometimes, the best residential and investment developments don’t even make it onto the market. When you see statistics on sales prices, vacancy trends and other market data on sites like the Real Estate Institute of NSW, this information only includes publicly listed properties.
However, often the very best investment opportunities are hidden off market, and because of this many buyers consider off market developments to be a unique investment opportunity. Let’s take a closer look at buying off market property in Australia.
For many potential property investors, the market can often seem a little barren and options may feel limited, with all the best opportunities sold even before the official release date to property investors with “the inside track”. However, with the property market, what you see is not always what you get.
An off market property development is one that is in fact for sale but is not being advertised on general portals such as realestate.com, but is being released only via approved developer partners who target the opportunity to their own clients.
Investing in an off market development has quite a few advantages:
• You are afforded the first look and choice of floors plans
• Exclusive deals on rental guarantees may be negotiated for you by your property consultant
• Furniture packs allow you have have a property ready for leasing day one with a bespoke styling solution appropriate for the area and target tenants with minimal organising on your part – crucial if the apartment is interstate or even international!
• Full payment doesn’t need to be made until the development is complete meaning you can secure a high value investment for relatively minimal initial outlay (the 10% deposit) allowing you time to continue to improve your savings.
• You can also lock in a price at the current market value for a property that will be completed in the future, a crucial advantage in a market which may rise over time.
• There are certain tax depreciation benefits and government incentives associated with investing in off market developments, such as significant stamp duty concessions in some states.
In order to gain access to the full breadth off market projects available you will need to speak with your property strategist, they will has access to the full resources of the Optimal Property Group, a large network of contacts and relationships in the real estate industry and will be able to provide you with a selection of off market options which meet your goals.
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The key to avoiding the pitfalls of off market property is working with a good consultancy team who can guide you through the entire process and give you sound, professional advice when you need it.
However, some of the key may risks include:
• Fluctuations in the property market, how to deal with the critical variables such as interest costs, rental yields, and developing a strategy to maximise your financial returns should always be part of your purchase strategy.
• Initial handover issues can be avoided by having a professional pre-settlement inspection made to ensure the apartment is finished to the contracted standards, such as making sure that all appliances are correctly installed to the agreed specifications (such as a Bosch dishwasher etc) and that the paintwork, joinery and shared amenities are finished to the appropriate level.
• Buying off market may mean the property is still under construction or even still in the planning stage, so without the ability to see and feel the final property it’s crucial to understand the contract that the builder is being guided by, so always get independent legal advice so you understand how an apartment may be changed between initial marketing and final delivery. For example, due to changes to design mandated by local council during the final approval stage.
• Changes in the development area between signing the contracts and project completion, can be an issue if you haven’t made yourself aware of what is happening to upgrades of infrastructure, such as a freeway upgrades slowing transit times for residents during construction etc.
That’s why savvy investors take the time to call local council during due diligence to confirm the medium term plans for the area etc. Again working with your property strategist will allow you to avoid such short term pain.