Buying off the plan as an investor can be a very smart tactic, if you time your purchase right.
This type of purchase means putting down a deposit and then paying nothing more until settlement, which is at the completion of the construction.
What this can mean is that if you purchase at the low point in the property cycle, you are buying at the right price today, not what the price would potentially climb to in two years from now which is the general construction period for an off the plan development. The additional benefit is that you could also have some increase in value by the time settlement comes around. Having instant equity in your property could be a nice added bonus!
In essence, you are controlling a purchase with a small amount of money until settlement.
If you get in early enough, you’re even able to choose the internal colour scheme you might prefer for your investment.
Cash-Flows
Of course, buying off the plan means you’re buying brand new.
For an investor this has some great advantages if cash flow is important to you.
Depreciation
As you are the original owner of all the fixtures and fittings, this means that you are able to depreciate all of those items. As an investor, this is a substantial income windfall for the first 5 years or so of owning the property.
Quality tenants
Tenants will also pay more for location and lifestyle. A tenant is no different to a homeowner in that they want, convenience and the ability to easily access amenity, employment, transport, shops, entertainment and, the CBD. Purchasing a good quality property that presents well, offers excellent fixtures and fittings and all the benefits of a lifestyle location will certainly put you in a good position to attract a quality tenant, helping you maximise your return.
This can also prevent tenants from being so transient. If they’re happy with their surroundings there’s often no reason for them to move which of course is great for you as an investor.
At Halcyon, we have an exclusive developer incentive available for investors – we’re guaranteeing you a tenant from day 1 that will pay you a 5% rental return for 2 years* removing the stress of having to find that first tenant, while putting you in a great cash-flow position. *See terms and conditions.
If you have a great product in a great area within proximity to employment hubs, you’ll be setting yourself up for good quality tenants and your property should always be in demand.
But also, remember that everything you spend on a brand-new apartment generates income for you because there are no wasted funds on land that does not generate cash-flow for you.
Hassle-Free
If you’re investor building a property portfolio, owning a second, third or fourth property needs to be seamless! In other words, you’ll want something that you can set and forget. You don’t want constant calls from the property manager or tenant requesting items to get fixed, or gardens aren’t being looked after. A brand-new apartment definitely fits the bill as “hassle-free” “investment worthy” as it’s lock and leave style suits investment perfectly.
Price Point
Buying off the plan in a high demand area allows you to get a piece of suburb that should deliver solid capital growth over time as well as strong cash-flow.
Capital growth is driven by the suburb you invest in. The great benefit of buying off the plan is that you’re able to get your “stake in the ground” of a high demand suburb at a fraction of the cost. For example, Subiaco has a median house price of $1,257,500 but a Halcyon apartment will only cost you from $330,000 to get a foothold into this area. That means your property is getting all the same growth benefits of the suburb, and your tenants have access to all the same amenity as someone that has paid much more to live in the same area. As mentioned, this is key for strong rental returns but also equally important for strong capital growth.
New developments
An area like Subiaco is situated approximately 3km from the Perth CBD on the western side of Kings Park.
This is a classic area that is incredibly well positioned and has a great entertainment precinct (restaurants, cafes and boutique shops) and shopping and transport needs for locals is well catered for with the Subiaco Square Shopping Centre and Subiaco train station.
While there is already a lot of existing amenity in Subiaco, there is also a lot of capital being invested into the area including Perth’s newest inner-city high school, Bob Hawke college and the Subiaco East Redevelopment project which will host new retail and hospitality opportunities that will stimulate new interest in the Subiaco market. Take a look here to see what new developments are set to help the Subiaco area grow in population by over 24% over the next 10 – 20 years.
This makes an area like Subiaco perfect for off the plan buying due to its locality, amenity and future developments that will stimulate growth and demand. This area is also particularly suited to investors who are looking for a lock and leave, low maintenance property in a lifestyle rich area that will attract a good tenant pool.
Subiaco Suburb Profile (February 2020)
- Proximity to CBD: 3km
- Median rent (units): $420
- Gross rental yield (units): 4.78%
- Median property prices (units): $420,000
- Vacancy rate: 3.81%
Education
- Bob Hawke College
- Perth Modern School
- Shenton College
- Subiaco Primary School
Medical
- Perth Children’s Hospital
- King Edward Memorial Hospital
- St John of God Hospital
Entertainment
- Rokeby Road café, retail and shopping strip
- Subiaco cinemas
- Subiaco Hotel
- Subiaco Common
- Regal Theatre
Shopping
- Subiaco Square Shopping Centre
- Bunnings Subiaco
- Coles Subiaco
- Woolworths Subiaco
Transport
- Subiaco Train Station
- Serviced by Rokeby Road, Hay Street and Thomas Road
Government Initiatives
On October 23, 2019 the WA State Government announced a 75% STAMP DUTY REBATE of up to $50,000 for pre-construction apartment purchases. Go here to find out more about this rebate.
Halcyon Subiaco is one of the few apartment developments that qualify for this initiative, offering significant savings for investors and buyers to capitalise on.
As a special limited time offer, we’re also sweetening the pot further by rebating you the remaining 25% off up to the value of $50,000, making Halcyon apartments 100% Stamp Duty Free*! *See terms and conditions.
What does that mean?
As an investor or buyer, here’s an idea of your potential savings:
- Save up to $9,975 on a $330K 1 Bed apartment
- Save up to $17,527 on a $495K 2 Bed apartment
- Save up to $32,315 on a $800K 3 Bed apartment
If you’re interested in a brand-new Subiaco apartment – that’s Stamp Duty Free, go here to get in contact with us today.
With the market being in a great spot to make a strategic investment off the plan – the Perth market is starting to strengthen showing good value in the market with growth prospects, and suburbs like Subiaco that fit the bill for off the plan investing re-emerging as a vibrant entertainment precinct with lots of new developments and redevelopments happening.
All that’s really left to do is get your finances in order and leverage the opportunities that exist right now in the market.
We have some amazing deals at Halcyon Subiaco including 100% off your stamp duty and a 5% rental guarantee for 2 years. What’s more, our investment experts can walk you through the key strategies that you can use to your advantage when buying off the plan such as, timing your purchase, buying at the right price, how to attract the right type of tenant to maximise your returns, and much more.
If you’re currently in the market looking to purchase brand-new off the plan, talk to one of our investment property experts today.