When a property has not yet been built the term for that is ‘off the plan’. There are many benefits to investing in off the plan properties because they give the investor more options for maximizing their returns. One of the biggest benefits is the decrease in stamp duty, although this only applies to the state of Victoria. The stamp duty is based upon the size and value of the property and the land that it is built on, however this does not apply when the building has not been built. The stamp duty can only be calculated based upon the value of the land and therefore what you pay is a lot less.
When the contract for the property is signed there is an agreement made as to the price that will be paid. After the contract has been agreed there will be no changes, which means that in a rising market the investor can make capital gains before they have completed the payment for the property. The market value of the property can have risen whilst you are still paying off the original price. Before the investor has started earning money on their rental yields, if that is their choice, they can have made significant capital against the state of the market.
Since the final payment for the investment does not
have to be made until the property has been completed, the investor has
a large amount of time in which to order their finances and restructure
their capital outlays. This is an advantage for off the plan property
as it allows investment in other ventures because available capital is
not stuck to the one investment.
Complete Real Estate Listing can be found here: Off the Plan Investments