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Off the plan property investment mistake! Be ware.

Discussion in 'Real Estate' started by glennt, 13th Jan, 2011.

  1. glennt

    glennt Member

    Joined:
    24th Jul, 2009
    Posts:
    13
    Location:
    Adelaide
    I was wondering what people think of this. I invested in a property two and a half years ago on an investment property off the plan ($540k). Yes I was a sucker, no stamp duty and a rental guaranty for two years. Judging by the drawing and photos I thought great, just a $2000 initial bond and wait until settlement. Plenty of time to save and let the market rise.

    After two and a half years the property settled, developers paid the stamp duty as agreed in the contract, but when it came to the rental guarantee.. they are planning to go bankrupt. We can't win because it will take more money to take them to court. Now the banks still require their monthly interest paid and theres a number of apartments wanting to be rented. The banks have under priced the property, and we agreed on a price, not knowing, that was over inflated at the time.

    Now I have to sell at the risk of hoping to get the price that I need so to pay the bank loan off and get my 20% bond back. Who's to blame myself and the realestate agent who sucked me in. I still can't find anything about the developers. Everone was in on it from the agents, finance company, strata managers, settlement agents. They all make their commissions and move on to the next scam.

    So folks be aware.

    Glenn
    :eek::mad::(
     
  2. vanessa

    vanessa V J Tait & Associates

    Joined:
    15th Jun, 2011
    Posts:
    23
    Location:
    West Pennant Hills, Sydney, NSW
    Vjtait

    Glenn,
    Unfortunately it is a lesson that a lot of people have learnt. There is no one to blame, however it should have been pointed out to you that buying off the plan has its risks and particularly when you most likely exchanged before the dirt had been turned.

    My suggestion would be to get a tenant in the property even at a lower rent, at least you will be getting some return, and work through it, if you put the tenant in on a 6 month lease, hopefully in 6 months there will be an opportunity for you to increase the rent a bit as the other units will be all occupied and slowly recoup the rental it should have been.

    Good luck.
     
  3. MrPhoton

    MrPhoton Member

    Joined:
    26th Jul, 2011
    Posts:
    7
    Location:
    Sydney
    With off-the plan purchases, always be aware that you are paying premium cost because the developer factors in the marketing cost of the development on top of their own inflated margin into the price. So it is not as low-priced as it sounds.

    Plus I'll be aware to buy into a property that guarantees rental yield. If the property is in such a good location (as promised by the developer), then they should not have promised rental yield in the first place. You want the property to stand on its own feet and is able to attract tenants on its own merits.