Buying an off the plan property offers a long list of potential benefits to investors. One strategy adopted by some investors is to purchase a property off the plan and sell it on even before settlement occurs.
This option is entirely legal and can have specific advantages, but it is important that you know the correct process before deciding on this investment approach.
Most investors decide to sell an off the plan property when it’s value has increased during the construction period. When this occurs the investor will be able to sell the property for a profit with the potential to generate high returns.
Typically an off the plan purchaser has only paid a 10% deposit and any profit on a re-sale can result in an extremely high return on their investment. Take the following example: Purchase Price $500,000, Deposit Paid $50,000 and Re-Sold for $550,000. The return on the investment would be 100%.
However, in other cases people will sell before settlement to improve their financial situation. This often occurs if the purchaser gets into financial difficulty and feel they will struggle to make the ongoing repayments on the loan.
Although titles don’t pass to the buyer until settlement, once an unconditional contract on the property has been signed it can be re-sold. It is important to check over the contract to ensure that there are no restrictions on re-sales prior to settlement.
It is recommend that the seller do financial calculations very carefully when deciding to re-sell and off the plan property. It is crucial to take into account the following matters: tax, agents commission, stamp duty, additional fees and the net effect.
At Varo, we highly recommend anyone looking to re-sale an off-the plan property contact us to discuss their needs. Coupled with our experience in off the plan sales and contacts in the financial sector we will be able to advise you on the re-sale process and what would be suitable for your situation. Call one of our off the plan specialists today on 08 8125 4900.