Property Investment Articles

Is buying units off the plan a good strategy?

I hate using the terms right and wrong when it comes to investing. I believe there is only opportunity cost and preference. Buying off the plan can seem like an easy, low stress way to accumulate investments, but in the current market with it’s uncertainties, buying off the plan units is definitely a higher risk strategy.

In today’s short video I just want to weigh in on the debate about whether it’s a good idea to buy units of the plan.

I’m often asked by people my opinion on the concept of buying units of the plan and certainly for a lot of people that have been a very lucrative strategy over the last 10- 20 years where you purchase a property today or exchange on a property today but you don’t actually settle or fully purchase that property for another 2-3 years.

Now in today’s market where there’s a lot of unnatural intervention going on from the government and in a lot of uncertainty in some sectors of the market, I would actually suggest that purchasing any cutting unit off the plan is actually a higher risk strategy particularly because all it takes is one nervous investor to come in and sell at a discount to really set the market for the rest of the units.

Now obviously there are some exceptions to this if you’re buying in a very small boutique type (kind) of series of units were maybe a bit close to completion or there’s some opportunity for you to participate in a development when you’re actually getting an upfront discount on that price.

The risk that a lot of investors are really toying with this current environment is that they’re buying or committing to placing down deposits on units which are maybe 12 to 24 months down the track, may or may not value up against the original price.  Obviously that there are some exceptions to this and there are always great opportunities in that market and I’m certainly not here to say it’s a right or wrong strategy, where I am saying is that you need to be aware of that risk that market may move against you given the timeline that you’ve got to.

The shorter the time line in terms of from when you put you to fold it down to when the property is complete I feel the lower the risk although obviously you know you need to take into consideration what’s going on in that market and whether they’re likely to be a price increase hope you found that useful if there are any comments please share them with me below and as always send me any ideas that you’ve got for video blocks in the coming weeks.

Salena Kulkarni from Phoenix Wealth Group, signing off.

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