Off The Plan: How It’s Done

Posted by Luke Graham

Our loyal readership will recall last week’s article that discussed the risk of adapting a strategy based on feedback from close ones that aren’t particularly ‘in tune’ with today’s property investment market. One facet of this that is often raised with Blue Wealth is the perceived risks associated with off-the-plan.

The face of off the plan property has changed dramatically since the global financial crisis, and now provides the purchaser with far more protection. Off the plan provides a purchaser with the opportunity to purchase the best within a development of tomorrow at today’s prices. Even though this is the case, inherent risks of off the plan need to be mitigated. Some of Blue Wealth’s strategies that ensure our clients are protected include:

Rental guarantees: a risk of off the plan is that there will be a vacancy period when a proportion of the properties in a development are put on the rental market at the same time. To temper this, we negotiate a rental guarantee with the developer to protect the purchaser’s cash flow while a tenant is sourced.

Stress testing: defaulting is a risk for investors that haven’t prepared for a change in market conditions. To help alleviate this risk our investment property specialists will ‘stress test’ the purchaser’s situation, which can include an increase of interest rates and vacancies.

Ongoing relationship: in the unfortunate situation that a client cannot possibly go through with a deal due to a change in personal circumstances, our team does its best to assist the purchaser in moving forward. No Blue Wealth client has ever lost a deposit.

Due diligence: an entire team within Blue Wealth is assigned to completing the due diligence process for the purchaser. With relevant tertiary qualifications and backgrounds in property investment and economic analysis, the ‘Research and Acquisitions’ team ensures that reputable developers are used and the right property in the right market at the right time is identified.

Posted by Luke Graham, on 22nd Jul 2014