Advice for Young Couple Looking to Buy a House (off The Plan)

Lfrozenchewii on 27/08/2021 - 21:07
Last edited 27/08/2021 - 23:15

Hey everyone,

Partner and I are interested in buying a 800k townhouse (3 BR 2 BA) as our first home. The location is very ideal for both of us and ticks all the boxes in terms of amenities.

Since I'm young and very inexperienced, thought I'd reach out to the veterans out here and get advice to make sure we're not rushing or overlooking things. About us:
- combined salary of 160k pa
- we have enough for a 20% deposit
- currently getting pre-approval sorted
- house will be off the plan with expected completion date of late 2022
- will be inspecting a different house built by the same developers to get an understanding of the quality
- currently living separately with our family w/ no rent. I'm giving my parents ~$500 a month to help out though

Given that I'm only 23, should I consider saving up for a couple more years?

Thanks everyone!

Update: It looks like the consensus is that off the buy plan is a bad idea. Thank you - we will definitely look at all our options and research further before making a decision.

Financial

Comments

  • iNeed2Pee on 27/08/2021 - 21:10
    +37

    In this market who knows what 2 years ahead will look like but I never think buying off-plan is a good idea.

    That is my opinion (Happy to hear what others say). Good job on saving up the 20% though!! ❤️

    • frozenchewii on 27/08/2021 - 21:12

      What about off-plan that puts you off?

      • resubaehtgnolhcs on 27/08/2021 - 21:16
        +41

        The fact that they can (and generally do) change the plans from what they show you to what they actually build! If you can live with this, than you will be fine.

        • boomramada on 28/08/2021 - 07:21
          +2

          I have previously purchased two such a properties and my only issue was visualisation of what you getting and timing (delivery date). Other than it's no big deal.

          Benifits were the pricing.
          Having a good conveyancer did help. I did some back ground research on the builders previous projects.
          Always look at the actual plan not the real estate advertising model or drawing.

          Would I do it again? Maybe. Cheapest way to get into new build/market. At the time I got my property, it's valued about 50k-100k over the market price.

          Issues that others had (from the people who I know), bad builder (this can happen with any build) , builder void the contact (excuse was covid) actual reason, house prices went up ( people end up getting deposit with broken promises).

        • pharkurnell on 28/08/2021 - 10:21

          Happened to neigbours girlfriend.. She ended up shattered with how small the rooms were

          There was no actual display of this model house she bought, but they showed her "one that is close" which in reality was nothing like it.

      • iNeed2Pee on 27/08/2021 - 21:18
        +16

        As above!

        They can change plans and you are stuck with it. They make it look all promising but then will hit you with things like a sunset clause.

        Poor quality, fluctuating house prices, sunset clauses, unknown finish date. I mean you can face that with building a regular house, but off the plan adds the added risk of not actually knowing for sure what the finish build will be.

      • garetz on 27/08/2021 - 23:13
        +5

        You should look at peoples horror stories they post on these forums, i am sure they will put you off buying anything off the plan.

        • funnysht on 29/08/2021 - 23:19

          To be honest how many go to plan and don't post…but I'm wif you I wouldn't buy off plan

      • [Deactivated] on 30/08/2021 - 19:26

        What you expect and see is not what you get.

  • poboy on 27/08/2021 - 21:13
    +15

    Google 'why I shouldn't have bought off the plan' and all similar derivatives. Read the blog posts. Assess the risks. Determine if you can mitigate or live with them. Make a decision.

  • Quantumcat on 27/08/2021 - 21:18
    +13

    Don't buy off the plan. So many horror stories. If you have a few properties and don't mind the risk it might be ok but don't do it as your first property. Imagine taking the time to save so much money and running into any of the bad things that can happen, will be such a disappointment.

  • jjjaar on 27/08/2021 - 21:20
    +20

    Off the plan is extremely risky. My advice would be avoid.

    Sunset clauses in Vic used to be such a dangerous part, but I believe its much harder for developers to get away with.

    But a big issue that still remains is that often you’re buying off a plan that doesn’t actually have relevant approvals. Ignoring the potential time delays associated with these approvals, further dragging out the timeline, the main concern with buying before approvals is that once approvals are sought, the plans you saw and the plans that will be built are different.

    The general floorplan will be the same, but you might have a window that’s up really high instead of floor to ceiling. Doors might be relocated, meaning you might have a clear view of the toilet when sitting at your couch. Proportions of the rooms may change size. Walls may move slightly, making some spaces less functional than you originally thought. Materials may change too and included appliances may be taken substituted if not specifically in the contract.

    The worst bit is, you probably don’t realise any of this until your final inspection. Years after making the purchase, and when you’re emotionally invested and exhausted and can’t be bothered going through it all again. Also, the market is now more expensive and you can’t afford the same thing.

    I’m sure there are plenty of stories of when buying off the plan goes ok. But the risk is too high.

    My advice? Buy something you can physically walk through. You know exactly what you’re getting.

    • zorodluffy on 28/08/2021 - 20:21
      +1

      is it the same with house and land packages? can builders for the house alter the same things you mentioned as off the plan builders do?

      • CheeseBeans on 30/08/2021 - 18:05

        A "house and land package" is just another way of saying "off the plan".

        It's generally a house that isn't built, that you didn't design, and they may vary the design significantly, planning approvals can be a problem, there can be delays to which they will generally just say "you're free to leave if you like" (which you won't, because you're invested, and property prices are now higher), corners can be cut… That being said, there's a convenience to it, and I'm sure a lot of people like what they get.

        I wanted/needed a house at the time I was shopping (or rent in the meantime), so I bought a new build someone had developed and was selling. It had some of these issues (eg. a layout choice or two I wouldn't have made myself, pavers instead of concrete slab in the garage) but at least I got to see it first and decide if I was happy with it.

        At the moment, anticipate major delays and cost changes. Materials are in short supply, and building is in demand. They'll be waiting on things like lumber, not knowing if it's weeks or months away.

        If there is something very particular you want, like a very large floorplan, alfresco area, something like that, obviously major renovations or building are your options…

  • freefall101 on 27/08/2021 - 21:24

    Buying off the plan can result in a finished product worth less than you agreed to, find out about other houses the builder has made and make sure you look at local prices of new houses for something similar. Since you're agreeing to buy it now when it's not built, it should be cheaper than the average new house in the area. Don't get suckered into being able to "make it your own" with adjustments and overpaying as a result, that's the real risk.

    Ask to use a bank guarantee rather than pay them any cash. That means you can earn interest on it (not that there's much interest to earn right now), or ask that interest earned while they hold it goes towards the purchase price.

    Maybe look at renting somewhere for 6 months together to see what it's like, if you're worried? Also, have you talked to your parents about it? If they're supportive then absolutely go for it. If they're slightly hesitant, also go for it. If they call your a moron and tell you you're ruining your life, then rent together for a few months first. Parents are usually over protective so if they support a thing, it's generally a safe bet.

    Honestly, looks like you're being pretty smart about it so may as well go for it. The price/income levels look pretty good, should be able to afford any interest rate hikes in years to come. Grats on saving $160k at age 23 (at age 23 I spent every last cent I had moving overseas, buying a car there and living until I found a job). If the relationship falls apart you sell the house and split the proceeds, or one of you buys out the other and begs your parents for support, it's not the end of the world.

  • Traveller107 on 27/08/2021 - 21:25
    +5

    Like others have said- DO NOT buy off the plan,it is never a good idea. A lot of builders are going bankrupt in this market and many on the verge of it so it's an especially bad idea at the moment.

    Buy something ready, detached and safe even if it is a compromise ( smaller, further out etc). Something that makes for a safe and sensible financial sense. You can always upgrade later.

  • Pelicannn on 27/08/2021 - 21:53
    +5

    I have personally bought off the plan but only because it was mostly built, that being said… it’s still been a pain. Delays after delays pushed the completion date 6 months later than it should have been and the final design still ended up being different to what was initially sold to us.

    If you’re prepared to have about a 1000 lies told to you over anything from trivial, to really important aspects, and you just want to get into the market now, you could consider it, but end of 2022 is a long way off.

    The only reason we bought into ours was because it was supposed to be finished in 4 months but that pushed out to 10 unfortunately.

  • Hank on 27/08/2021 - 21:55
    +3

    One of the reasons why it is generally not a good idea to buy off the plan is because you are basically buying a brand new product at retail price. Developers may discount a bit as incentive to secure enough numbers for a building project, but they still tend to be overpriced in my opinion, with most of the value to be made by the developer and marketeers. What makes it worse is that you also don't get the property right away, incur some risk during the building process and even though you should get your money back if the development project doesn't go ahead, it could still have been lost opportunity costs had you bought the property somewhere else. You are much more likely to get established second hand properties at a better price that you can potentially add more value, especially if you are savvy buyer and are a bit more creative (e.g. finding properties that have some sort of issue and resolving them or figuring out how to improve the property in different ways to increase their valuation).

    • netjock on 29/08/2021 - 13:36

      Basically no ethics when money is involved. Not worth the savings.

  • avoidfullprice on 27/08/2021 - 21:58
    +29

    Bought an off the plan. Checked previous builder's work. Good quality. Worksite looked clean during built. Location suitable. Everything pointed to a good buy.

    Pre Settlement time. Built much smaller than on plan. Rooms much smaller. A number of things didn't meet the contract. Gave them the list of defects to fix before settlement. BUT they didn't fix it… And because they are not major defect, you have to pay the balance or you are the one in wrong. YES. Angst starts here.

    You learn the insulation is subpar. The finer details don't meet what they describe. Paintwork poor and rushed. ROOF NOT FLASHED properly so there are leaks. Appliance not fitted correctly. And, good luck getting NBN in your first year of moving in, because the paperwork involve to subdivided the plot is not submitted.

    You try to get builder to fix. Builder shift blame to developer. Developer don't answer. The real estate agent doesn't give an eff. Your strata manager doesn't act on your interest. You get disappointed very quickly.

    I was already in my 30s when I signed the off the plan. First home buyers were not applicable on older houses, so for extra 10k and stamp duty concession I had to buy off the plan. Today is different, at least in NSW.

    Good luck and YMMV. But if you think you'll be alright, you won't.

    Save up for already built property.

  • Drakesy on 27/08/2021 - 21:58
    +16

    it's basically a free no risk 20% loan for the developer.
    If the house goes up in price they can delay and say they haven't got permits or some other story until the sunset clause comes in and then void your contract (you get you deposit back) and on sell the house to a higher bidder. You end up in a more expensive market with no house.

    If the house goes down in price you're still stuck with it no matter the value. You end up with an expensive house that's worth less.

    People only think houses go up.
    People in Perth would suggest otherwise.

    Definitely do your homework. This was A Current Affair's bread and butter back in the boom.

  • Jjj888 on 27/08/2021 - 22:08
    -4

    Very young to commit to such a huge investment, how can you be sure you both will still be together or even amicable in 20 years to still live up to your obligations to this million dollar loan (once you add up the interest paid)

    A house is like a child

    • Indomietable on 28/08/2021 - 00:55
      +6

      Bollocks. A house is nothing like a child!

      You can always sell the house if you don't like it. You can paint it, torn it down, subdivide it. You can fix most of issues with the house by throwing money at it. Child is nothing like this.

      Best time to buy is when you are young and just chomp the mortgage down.

  • QuickdraW on 27/08/2021 - 22:17
    +3

    Sounds like there is no urgency, so take your time and continue saving while looking at existing homes until you find one that suits.

  • wobblydrow on 27/08/2021 - 22:18
    +3

    We bought a 4 br 2 storey 1.5 million house off plan and recently moved in.only issue was covid delays. We were lucky that the developer has own builders so no subcontracts issues. House was an extension of 15 identical houses built 2 years before so we could see format and speak to neighbours as to how it went. Very happy with result and zero issues.

    I would say off plan is fine, but I would spend time checking previous builds and ask for several examples to discuss how the developer was. In my case was very happy, and for 1st buyers the incentives can be good.As long as you know what can happen it's ok.

    One word of warning, check the off plann stamp duty discount, we got caught as Vic gov changed rules year before we signed and we didnt realise so payed full stamp duty, get conveyancer advice first.

  • Orico on 27/08/2021 - 22:32

    Given that I'm only 23, should I consider saving up for a couple more years?

    GEt married first. Then buy a house.

    • rektrading on 28/08/2021 - 00:51
      +8

      It's not the 1950s.

      Get with the times.

      • Orico on 28/08/2021 - 01:06

        Get with the times.

        You mean frequent divorce? lol

        • AlanHB on 29/08/2021 - 21:50
          +5

          If you don't get married you'll never divorce.

    • morse on 28/08/2021 - 07:28
      +2

      Getting married is probably not essential and will use some of that hard earned deposit. But you do make a point in that if investing in property together OP and partner would want to both be on the same page in terms of commitment to the relationship and have a mutual understanding of what happens to the property in the case of a split. As well as considering if both people in the couple are making equal or different contributions.

      Personally I felt more comfortable being engaged before we bought, even though we’d been in a committed relationship for a long time. It was actually nice having the house before getting married, especially as we got married locally and used it for entertaining and a base at the time of the wedding. We did wedding prep there and it’s nice having those memories in this house.

  • Gelato on 27/08/2021 - 22:45
    +1

    Given this current market, the completion date might get delayed if the builder/developer has cashflow problems. I see this on apartment building started construction before GFC, and got untouched for 2 years after GFC before resuming construction.

    If the economy goes down, you will find them selling the same townhouse at discount when it is completed.

    Plus other bad ideas that ppl mentioned about off the plan.

  • taoz on 27/08/2021 - 22:47
    +3

    Advice would be do not buy off plan.
    Your young. committing to huge loan with partner at 23, not wise. Even worse when you waiting a year, and wont know exactly what it looks like

  • MAB on 27/08/2021 - 23:30
    +9

    think people are confusing off the plan units, with off the plan townhouses - standalone development on common block vs units.

    Off the plan townhouse doesn't have the same pitfalls as a large mid-high rise apartment building.
    2-4 on a block townhouses are like a standard build in Victoria. Pretty much no different to a home build in a new estate, but generally in established areas. Usually 6 months longer to get approvals for sub division.

    Dont get married first, thats a money pit. Great day, but you won't get that cash back.
    Buy as soon as you can, dont over capitalise

    But with 800k id be looking at a stand alone house - no issues with strata, more land. 23 buying with a partner is the larger risk than the actual contracted build. 23 is young, things can happen and people can drift apart. Work out how you would split this asset if something would go wrong. Its easier to have the convo before you enter a deal, than at the exit!

    Covid tho - the wild card. Id be moving to the hermit kingdom of WA if I could.

  • USER DC on 27/08/2021 - 23:33
    +2

    Congrats on saving up this much mate. (Do you mind sharing how long did it take you to save this much)

    But seriously I am so shocked by this, you're at only 23. Thats a lot of work.

    I am also planning to buy some land, would hardly reach 1/4 of that salary being at now almost about 20 years soon. Do you have any advise how to save up more OP? especially as a single, with no rental burden (living with family without rent).

  • miwahni on 28/08/2021 - 00:43

    Even in this buoyant market I'm seeing properties bought off the plan 1- 2 years ago in Melbourne and Brisbane especially value up now lower than purchase price. Not an issue if you don't need a loan, or have a sizeable deposit, but an issue if you're looking at 80% LVR. The worst ones are townhouses in estates - some have around 50 townhouses in the estate and the vals just aren't coming in. Had one today with a 17% variation, not good. However if you're buying in a desireable area, with mainly owner occupiers around (as opposed to a townhouse development aimed at interstate investors) it's less of an issue. Only have to deal with changed plans etc then.

    I think the biggest risk factor is the market. Prices are going gangbusters at present - but what if the economy comes to a shuddering halt in the next 1-2 years? Just have to think back to the GFC and the effect it had on prices….

    • diddy50 on 28/08/2021 - 22:52

      House prices barely moved during the gfc in Australia. A slight drop.

      We missed most of the falls due to falling interest rates.

  • Indomietable on 28/08/2021 - 01:32
    +6

    Don't think as the house you buy is your forever house. Agents and developer can smell this miles away.

    Think of it as a place that can get you to a better place. I personally would buy old house/unit with land near good school in established suburbs. I would avoid new estate or suburbs with lots of supplies ( ie empty flat land)

    • Jjj888 on 28/08/2021 - 02:19

      Totally agree, don't see the point in these new developments with what 300sqm blocks…

      Personally prefer to find an established neighbourhood with the best schools and locale even if it is an older house you'll get more land and value for money that can later be subdivided anyway.

      Sadly many of these off plan homes are done quick and they tend to cut costs as much as they can and they all look the same anyway literally every single home is a copy of the next one… My family always looks for the older home in the best location next to the best schools

      • this is us on 29/08/2021 - 23:54
        +1

        In Melbourne, you will need 1 to 1.5M for a horrible old house ready to be knocked down in any 400sqm land, then knocking it down to start building something. Let's be extremely optimistic and say another 500K and 3 years, without having the house as guarantee for a mortgage.

        Yes, buying a horrible house with a land, knocking the house down and building the perfect house is the perfect scenario but often this is unattainable.

        I am actually impressed that OP was able to find a townhouse 3BD 2 BA for 800K.

  • MrThing on 28/08/2021 - 07:10
    +2

    "off the plan"

    ……dont do it

    • [Deactivated] on 30/08/2021 - 18:50
      +1

      This. / thread.

  • morse on 28/08/2021 - 07:42
    +3

    Congrats on the deposit.

    Unless one of you is a lawyer who can go through the contract with an fine tooth comb I’d avoid. Even then you could get burned.

    If you’re looking to move in 2022, just start looking for established properties now, it might take you a while to find one.

    Consider what it is you liked about the plans. If it was all new fittings and modern look, consider that some updates can be quite inexpensive in an existing property, like paint and carpet. Bathrooms and kitchens less so, but if you eventually re-do these you can make them as you like. Be aware the quality of fittings in some of these off plan builds can be quite poor.

    Also consider in your budget what else you might need to buy in the coming years eg wedding, car, travel and make sure you can still meet repayments with everything else you’d like to do. $800k does seem reasonable in light of your income, but you never know when a baby or something else might change that. My hubby and I budgeted that we’d be able to afford repayments on one income, but we’re risk adverse.

  • Bob Svargis on 28/08/2021 - 09:16

    Congratulations on being able to save the deposit, that’s no mean feat.

    At 23 I wouldn’t be buying off the plan. You still have travel and fun times ahead and giving a property developer an interest-free loan is not something you want to have hanging over your head, getting in the way.

    I’d instead go for something already built. There’s too many horror stories about off-plan purchases. On the flip side, some people have done very very well in an appreciating market but the downside is that the purchaser bears the risk in an off-plan purchase. Not only is it a cheap loan for the developer, it’s also a way for the developer to spread the risk to the purchaser because if the market slumps, he’s got a guaranteed sale. If the market booms, he’ll sell it to someone else once complete, for a higher price.

    Best of luck though. Maybe get some advice from a conveyancer or solicitor if you’re not sure - it doesn’t cost much.

  • Lastchancetosee on 28/08/2021 - 09:27
    +1

    Just one anecdotal positive experience.

    Bought a townhouse off the plan, with modifications I wanted, and am happy overall with the quality of the build and finishes. The companies for the selections were good local companies and never tried to push for higher goods. I did upgrade the kitchen appliances and bathrooms, for personal preference and resale value. The landscaping was pretty ordinary, not like the pictures, but I wanted to redo that anyway. It's a community title because we have a common Electricity box, but everyone has been able to have pets, add solar, design gardens etc as they wanted to.

    We looked at lots of places from the builder to see the finish,and worked with our broker to manage things, which made it easier.

    The main thing for resale is to ensure that the build is no more than 50% of the total cost. The land is the thing which appreciates, not the build, so don't overcapitalise on that.

  • 82norm on 28/08/2021 - 10:21
    +1

    Buying off the plan is like a box of chocolates, you never know what you’ll get inside.

    • lunartemis on 29/08/2021 - 15:53
      +1

      Sounds like Forest Gump's mother's advice

  • Brucegonemad on 28/08/2021 - 10:32

    Advice from someone who's in the industry… don't do it. Too many unknowns, the risks outweigh the positives.

    Also, be in a position to buy if something pops up that ticks all the boxes for you both. Too many people miss opportunities because they are not ready to put in an offer.

    Know your market and be in contact with agents in that area regularly so you're on their radar and they know you are keen to buy. To increase your chances of them contacting you back, have a criteria of what your ideal property is, what your budget is and have pre-approval in place. Call them and then follow up with an email with the above information at minimum.

  • Talla2xlc on 28/08/2021 - 13:03

    Buying off the plan house and land packages, let alone townhouses or units is a big NO NO. WHY? Because property is all about control. When you buy a unit or townhouse you don't actually own any of the land.

    The body corp will keep rising every year and the body corp manager will ensure that they select their insurance through a broker that pays them, not the body corp, for their business.

    Then, when it comes to repairs, your "professional" body corp manager will select the tradies they usually do business with.

    Many people don't understand that property is all about control and to a lesser extent networks, which flow from control.

    Buying off the plan also means
    -All the disadvantages, many I have not mentioned of not owning the underlying land plus
    -Your builder can change the underlying construction materials used (again no control)
    - Your builder can change the floor layout, design and size of your unit (unless they agree you insert specific clauses in the contract to protect YOU)
    - Your builder will charge you an arm and a leg for any changes to flooring, kitchen, bathroom, etc.

    I would not even dream of buying off the plan, let alone a unit or townhouse.

    • Drakesy on 30/08/2021 - 13:51

      Nothing in his post though says that it's a strata title?
      you can have green titled townhouses.

      Although second part i do agree with.

  • frostman on 28/08/2021 - 19:21

    buying off the plan in the 1990sand early 2000s was a good idea.

    Not now.

    Most of the developers are looking for a quick buck, whatever is in the design/concept/showroom can be changed without your approval.
    you might be left with a dudd

  • Stevecro on 28/08/2021 - 20:25
    +2

    buy a caravan

    • funnysht on 29/08/2021 - 23:34

      And get a science degree

  • Jjj888 on 28/08/2021 - 20:27

    I don't know why everyone is in such a hurry to own property… It's such a huge commitment. I've seen people to crazy buying homes back in the 90s/00s only to lose their jobs and be stuck with the loan and many losing their homes

    • Ughhh on 28/08/2021 - 20:32

      I've seen people to crazy buying homes back in the 90s/00s

      A house in a nearby suburb has easily doubled since the 00s, pre-covid.

      • gromit on 28/08/2021 - 21:11
        +2

        doubled in 20 years is a bad investment (less than 4% annual ROI). having said that most places thankfully have gone up way more than double.

  • Jjj888 on 28/08/2021 - 20:28
    -1

    Take that money and live, travel the world, learn a new language, backpack all over Europe while you can before you're old. Experience life before it's over

    • beyondtool on 28/08/2021 - 20:56
      +2

      … and then rent the rest of your life…

      • Drakesy on 30/08/2021 - 13:52
        +1

        …And spend the rest of your life regretting that you didn't go travelling in your 20's when you were young and without kids.

  • branners on 28/08/2021 - 20:38
    +7

    Have bought off the plan twice.
    Best advice I got was from a builder, who told me that the builder in my case would be very keen to get the deposit, because he was paying interest on the land and his machinery and needed cash flow.
    So drive a hard bargain. That may not mean driving down the price; it might mean getting extras included in the contract.
    So I insisted on a bigger oven, double glazing, better light fittings and switches, upgraded floor materials (better carpet and tiles) and shelving in the garage. Once he understood that I understood he needed the cash, he agreed to everything I asked for.
    And when the big day comes, inspect the hell out of the place and make sure everything that is supposed to be there is there, and perfect. Last time I did it, the builder sent an office junior and had allowed 45 minutes on a Friday afternoon for the whole property. Six hours later, we had covered half the place and agreed that we would come back tomorrow. The list of things to fix or modify was 3 pages. Don't sign off until you are 100 percent happy.
    Don't be nice about this stuff, it's a big commitment, so if you go ahead, dig in and get what you want. Good luck to you

  • beyondtool on 28/08/2021 - 20:54

    I would strongly advise against off the plan purchasing. Granted it was an apartment - but a friend bought one off the plan in the Gold Coast market when it was starting to boom several years ago. Once he signed there were numerous delays, increases in price for the additions he wanted, he lost his job before the contract was finalized and if his dad hadn’t given him a sizable loan he wouldn’t have lost his entire deposit.

    There are several risks, including the builder going bankrupt, the timeline blowing out, the bank refusing the loan, the building not meeting code, challenges with the body corporate (pets, extensions, gardens, just for starters) and the market is almost certain to drop in the next few years.

  • Vent89 on 28/08/2021 - 21:30

    A lot of the comments here negging off the plan seem to stem from strata complexes etc. We bought a House and Land townhouse package in vic from one of the major builders in a smallish townhouse complex nestled among actual blocks/freestanding homes. Our house and room dimensions were near identical to the plan. If this is what the OP is actually reffering to I don't there is much risk in terms of getting a smaller house than they signed up for.

  • this is us on 28/08/2021 - 22:18
    +2

    I bought an apartment off the plan years ago, settlement planned for "late 2020". Despite covid, settlement happened last year and I am overall happy.

    I liked the idea of being able to choose the floorplan and modify the apartment completely. We also added plenty of power points, negotiated the finishing and fixtures and appliances, specifying brands and sizes to make sure everything was on the contract.

    It was a way to get into the property market and finally buy something. If I paid X, a house with the same size in the same area would cost 2X, and I would have to wait a few more years to get there. Moreover, we did inspect houses and went to a few auctions. The only house we were interested in was 8km away and sold for 2.5X. Lots of horrible, old, poorly designed, box-style houses for 2X+ but I wouldn't pay X for them as I'd have to knock them down and spend another X to build something that I like.

    Therefore, an apartment was a good idea, and off the plan was cheaper, and flexible to my own wishes.

    I don't like the idea but it is what it is… It was that or paying rent for a few more years.

    I don't regret, love my place, but I was a bit obsessed with adding every detail to the contract, and including a clause saying that the contract would be cancelled if settlement didn't happen by the end of 2021 (one extra year from the ETA). I've seen many off the plan apartments and town houses being delayed for many years.

    If you go this way, make sure you are covered and that the details, items, area, and floor plan are detailed, with names, measurements, colour, everything that is important to you.

  • AustriaBargain on 28/08/2021 - 23:02

    You say first home, so you may want to buy more homes as investments later. But you could buy zero homes and invest your money elsewhere. It's a pain having to move a lot at the whims of the rental market, but there is freedom in not being anchored to a particular home or homes too.

  • yadq on 29/08/2021 - 06:03

    May be worth checking school catchments for the area. That’s something I was “too young to think about” at the time and I sorely regret now…

  • Brick Tamland on 29/08/2021 - 09:49

    I think the 'off the plan' approach depends on your appetite for risk. Being your first home you want to have a nice experience and enjoy the home. If you aren't in a rush then keep looking and saving and you'll find something you'll love.

    Generally speaking developers will have to pre-sell (take deposits) on a certain amount of homes to get finance for the project. So the developer will be motivated to make these sales ASAP. If you can negotiate a really good deal with a bunch of extras it might be worthwhile. I've seen quite a few developments where the pre-sell homes were picked up much cheaper than the latter stages. However, as other have mentioned you are at the mercy of the developer not being a scum bag.

    Personally I wouldn't go off the plan as I can't tolerate the risk and honestly don't need the stress. But you can mitigate the risk by researching the developer and looking at their past projects. See if they have built nice projects in the past. Door knock if its a recent build, people generally like chatting about their experience.

    Also keep in mind that the developer will try and sell the dream, like a display home, it will have all the bells and whistles. The actual home is more likely to be much more basic, it helps to set your expectations.

  • Zapwap on 29/08/2021 - 11:19

    Bought off the plan 2 years back (about same age as yours rather I was 6 months younger than you when bought, so don't worry about people advising against buying a house when too young)
    However, the house we bought was over 80% built when we inspected and we knew what we are getting.

    Here, your best bet is to examine builders previous work, compare accuracy, quality, builder's support post purchase, talk to previous owners etc.

    If above exercise satisfies your expectations, go ahead. My best wishes for your future mate.

    • gimme on 29/08/2021 - 12:13

      I agree, it's a tradeoff. Don't listen to categorical opinions about NEVER buying off the plan based on lots of anecdotal stories. Hundreds of thousands of ppl BOTB without any issues. The key just like everything else in life is due diligence. That's how smart folk maximise value, whereas many others go for the easy/lazy middle of the road option.
      Sounds like OP is smart enough based on financial position. Good Luck.
      PS: I have purchased off the plan and almost tripled my return in 9 years in a market that wasn't Sydney.

  • deme on 29/08/2021 - 12:53

    This will end well.

    • Bafranz on 29/08/2021 - 13:02

      Hope so.. personally we bought off the plan, by the time we moved in it was evaluated a nice amount more than what we signed the contract for

  • fedex11 on 29/08/2021 - 13:04

    Many here suggesting against buying off the plan but wouldn’t some of the advantages of doing so being:
    - it’s going to be a new property knowing that will be no wear and tear unlike an established property
    - builder’s warranty (first 8 years from completion usually?). I would have thought this is an important advantage if there’re any structural issues after moving in then builder would be responsible to fix
    - stamp duty discount

  • tessel on 29/08/2021 - 13:10
    +1

    1st home 800k. Omfg. No disrespect to you. It honestly saddens me that we have allowed real estate to become what it is a screw over the younger generations or people looking to buy their first home. It's totally wrong. I'm waiting for the great reset because by God we need it.

    • Mistredo on 29/08/2021 - 13:52
      +4

      800k is cheap these days…

      • tessel on 29/08/2021 - 17:02

        Yup I knew someone would say that ;-) I better buy 5.

      • Jjj888 on 29/08/2021 - 17:10

        In Sydney sure but In Adelaide I could buy a mansion within 30 mins of the city

        • silverrat23 on 30/08/2021 - 13:29

          Yeah but, it's Adelaide.

    • koalabargains on 29/08/2021 - 14:40

      Whats the problem?

      OP is 23 and has a familial income of 163k.

      It's just inflation and big silly numbers which makes everyone feels like a winner.

  • JuryWheel on 29/08/2021 - 13:38
    +1

    I think off the plan can be good as long as you can trust the builder - maybe ask for 3-5 examples of ones that have built (some 5 years ago) and go and drive last them/knock on the door to see how they have worn? Personally, if I had my time again I would go for the biggest block of land in the suburb I liked, no matter the house condition of size. At your age, you won't need anything big for at least a decade, and reno-ing is fun when you are young and don't have kids. All of my friends who have done the best, bought big blocks of land.
    Further to this, if you wanted somewhere new, had you thought about buying somewhere as an investment (old house, big block) and renting a newish place where you want to live?

  • koalabargains on 29/08/2021 - 14:39
    -3

    Only the poor or stupid buy off the plan.

  • lunartemis on 29/08/2021 - 15:50
    +1

    Being only 23, how long have you been with your partner? Maybe you should try living together to make sure you are happy with each other's company before buying a house together. Also, will you be able to cover all the costs when going on a maternity leave (assuming you want to start a family)

  • parcus on 29/08/2021 - 17:28
    +4

    Can't see why you wouldn't at least want to rent a place together first? You'll learn a lot about your relationship living together before putting yourself in a large mortgage which would be under both your names. Your finances seem fine sure, but especially considering how frothy the market is right now, it's not like you're getting anything of good value currently, meanwhile rents are cheap for the most part. You can put that saved deposit to work by investing - even if it's just some safe etfs - while you wait out and see how the market moves and how interest rates go before figuring out next steps

    • this is us on 29/08/2021 - 23:39
      +1

      +1 Living together before the financial commitment is good advice.

  • Bills22 on 29/08/2021 - 21:48

    Who's the developer/builder?

    • Jjj888 on 29/08/2021 - 23:48
      +1

      BOB the builder

      • Bills22 on 30/08/2021 - 10:45

        Definitely off the plan will be advisable if it's done by BOB.

  • AlanHB on 29/08/2021 - 22:03
    +1

    Congrats on getting the deposit ready dude.

    The only advice I can give is to buy a house that you like that is within your budget. A good way to budget is to make sure that the mortgage repayments do not exceed 25% of your combined post tax income.

    But I think two issues you have are:

    • it's unclear if you've lived together by yourselves before. It's really different than dating and could end horribly. In most cases people get out of this by simply breaking up and moving out, but you guys would instead have to also deal with a massive financial purchase to sort out, and that sounds horrible

    • as you've never lived out of home before, you probably won't know what you like and don't like, and therefore could be buying a place that doesn't work for you.

  • JohnSy on 29/08/2021 - 23:58

    Best advise - don't buy off the plan.

  • Bunnyburger on 30/08/2021 - 00:25
    +1

    Townhome?

    DO NOT buy anything with a body corporate. Own your own shit!

    • CheeseBeans on 30/08/2021 - 18:16

      Smaller strata schemes (1,2,3 or 4) not stacked on top of each other are nowhere near as bad. I've got a townhouse- I self-manage the strata so we don't get screwed by some corrupt body paid to do it. 5-10 years down the road I'll move on and rent it.

      But if you're sharing ground space/multi storey, and don't have your own garage/parking, prepare to have nightmares. Anything like excessive shared walls, parking space, very high strata fees, beware.

      • Bunnyburger on 05/09/2021 - 20:02

        You're probably right for small schemes. It's terrible for the hotel/apartment hybrids.

        • CheeseBeans on 06/09/2021 - 12:30

          Yeah, buying into anything that stacks is something I'd REALLY avoid, unless you had a very good business case for renting it out or an airbnb style scenario.

          If you want to live in an apartment, rent it for sure

  • Jjj888 on 30/08/2021 - 13:33
    +3

    LISTEN to the voices of wisdom and experience DO NOT buy a house with the woman if you've never lived together!! I don't care how in love you are it changes when you live together

  • cookmush on 30/08/2021 - 17:37

    I think as long as you don't expect what is in the shiny brochure and stick to the facts/plans you'll be happy.

    Don't buy it because you saw a showroom or model with what you were after, look at what's in your contract - there's variations in that, but not much. You will see variances between the marketing and what you get.

    The price seems about right, I think you do pay a bit more, but you're also not coughing up all the money straight away. At your age, you will experience wage growth as well, this is a good way to get your foot in the door.

    Your repayments are ~640, call it $700 including strata, which would be equivalent to your rent - I think you you were to get a place to rent at the end of 2022, for 3BR, you'd probably be looking at the same amount, but your repayments will never go up.

    Avoid super high rises where things can go wrong, or compensate for that in your price, but I don't think off-the plans are that bad, shortcuts can be made, but no one purposely goes out to make a bad building. There's a risk, but you're compensated for that, just make sure you're not paying for the marketing.

  • [Deactivated] on 30/08/2021 - 19:31

    In financial terms: The construction company does not have enough capital to fully complete their project. They base the final result upon the interest and commitment they receive from the market about their project. If you investigate in the overseas markets, this is a common scheme where the company overcommits and shows dreams and many even get their house (depending on the company) but the raised capital is often used to start another project and the current project and commitments get delayed as in this business, time is of essence and the new project helps build brand and also raise more capital. Right now this is fairly new in Australia and there are not enough regulations on meeting delivery and quality standards, however the tendency of the industry and competitive and capital pressures in it will lead to this behaviour from the construction companies.

  • sauce2k on 30/08/2021 - 19:36

    Check out opal tower, water damaged Zetland apartment (they call it the bombshell lol) and Mascot apartments.

    My friend bought a place and they changed the structure, so it's smaller than what was stated on the contract.

  • Uberd on 01/09/2021 - 10:12

    I actually applied for a housing commission apartment in Sydney and have bought 4 properties in Indonesia. Some mountain farmland with ocean views, a small Villa near a beach, an apartment in the city and a shop-house near Singapore. I just pay the house rent and sub let it out to a relative.

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