I plan on buying my first property off-the-plan in Canberra

Discussion in 'What to buy' started by Curoch, 16th Jun, 2020.

Join Australia's most dynamic and respected property investment community
  1. Curoch

    Curoch Active Member

    Joined:
    21st Aug, 2019
    Posts:
    35
    Location:
    Canberra
    Do you mean a free standing house? Or free hold title (non-ACT)?
     
  2. Curoch

    Curoch Active Member

    Joined:
    21st Aug, 2019
    Posts:
    35
    Location:
    Canberra
    Okay I'm going to run the numbers on a few scenarios with a couple of properties each:
    • Buying new/OTP for the additional $25k and tax deductions
    • Buying established without the extra lump sum and only Building Allowance-component of depreciation
    I'll report back here next week with my findings. Thanks again everyone for your help!
     
    Lindsay_W likes this.
  3. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    You sure OTP apartments qualify for the $25K? I've heard they don't but haven't confirmed
    One of the requirements is construction needs to commence within 3 months of contract signing, typically much longer for OTP to begin construction, might not be an issue if it's already out of the ground/built but best to confirm if you're basing your strategy on receiving it.
     
    Last edited: 19th Jun, 2020
  4. Curoch

    Curoch Active Member

    Joined:
    21st Aug, 2019
    Posts:
    35
    Location:
    Canberra
    Yes, OTP apartments and townhouses are eligible, although as people rightly point out, settlement before 31 Dec 20 at the latest and commencing construction no more than 3 months after that is a tall ask for a lot of people. Buying a OTP apartment that's coming onto the market 'round about now anyways we'll fix that issue, whereas trying to do the full house build (I don't know of many newly constructive properties in the ACT that would be eligible) is harder, and frankly for me more intimidating. I simply don't know much about that area.
     
  5. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,256
    Location:
    Australia
    No the developer cant up the price now, but think.... if it’s almost built and still hasnt sold, would the developer have had to discount to sell it?
     
  6. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,256
    Location:
    Australia
    Whats the point of leverage without capital gains?
     
    thatbum likes this.
  7. Lindsay_W

    Lindsay_W Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    4,982
    Location:
    QLD/Australia Wide
    A full house build would be much less risky in my opinion, the amount of OTP apartments that supposedly have a 'settlement date' usually get pushed back and you have no control over it. At least with house and land the builder /developer doesn't have to meet x amount of pre-sales before construction can begin.
     
    Curoch likes this.
  8. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,436
    Location:
    Melbourne
    Through comm prop trust or areit (effectively joint ownership). Aim for ~6% yield after paying interest, management fees etc etc

    The Y-man
     
  9. Manipulative

    Manipulative New Member

    Joined:
    19th Jun, 2020
    Posts:
    1
    Location:
    Canberra
    My girlfriend found an off-the-plan townhouse in Greenway that we are thinking of purchasing as our first home. This would be our first home, with the primary goal of living in it.

    We have found a lot of conflicting advice about these purchases but are leaning toward getting it because:
    - the builds at the complex are nearing completion and we like what we see
    - the price is good for us
    - it ticks our boxes with respect to amenities and location.

    I am not sure if this helps, and we are also open to advice you guys could share with us.
     
  10. Jamesaurus

    Jamesaurus Well-Known Member

    Joined:
    18th Dec, 2017
    Posts:
    439
    Location:
    Canberra
    Im writing this from a geoCON one in Greenway... renting is cheap here, strata is not, capital growth is poor and there are 3 new sites all set to build up identical lego blocks so is likely to stay poor.

    I wouldnt get too fussed about the 25k off the already overly priced developers margin buffed new build..

    What about investing in a house in an established suburbs for capital growth, and renting in the shiny new facilities with the gym/pool/sauna/lift that a less savvy landlord can pay for you...?
     
    Curoch likes this.
  11. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,436
    Location:
    Melbourne
    If it's your own home, buy it and enjoy the newness! :)

    The Y-man
     
  12. bunkai

    bunkai Well-Known Member

    Joined:
    26th Jun, 2015
    Posts:
    858
    Location:
    Sydney
    I found it really hard to get the 80% lvr on the above when starting out !:p
     
  13. marty998

    marty998 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    627
    Location:
    Sydney
    My brother is looking to upgrade his apartment in Canberra but we are steering away from OTPs (nice as they look).

    High strata fees, ordinary shoebox floor plans, low prospects of any capital growth. It's not a great decision. And if you're renting it out you'll get hit with punitive land taxes.

    Army Reserve? Thank you for your service.
     
  14. Stoffo

    Stoffo Well-Known Member

    Joined:
    14th Jul, 2016
    Posts:
    5,301
    Location:
    In the Tweed
    I agree with the earlier post by @The Y-man , the builder is most often the problem, but lets not forget that the builder ends up cutting corners to win the contract and try to make a profit, largely because the developer is trying to MAXIMIZE their own profit.....

    Plenty to read on OTP, or @MTR thread on don't buy in 2020.

    Where are you living now?
    Where do you intend to live when you make this an OTP an IP ?
    Relationship ?
    Hobbies ?
    Car ?
    Other debts ?
    Credit card(s) ?

    $85,000 pa income and only $30k saved :confused:
    I don't earn that much, have a partner 2 kids and a grandaughter at home (originally 4 kids) and service 3 mortgage's in Syd, and that's taken me 12 years to get to o_O

    Started with a dump and ever so slowly worked our way up ;)

    Just remember there is SO MUCH MORE than the purchase price, the developer always nominates a managing agent to keep initial strata fee's low, then everyone moves in and "want" additional things and changes, there's quickly not enough funds and levies go up 30-50% :eek: (things lime the lift service or annual fire safety statements/inspections are often covered by the developer for the first year after occupancy certification, then BOOM additional costs not planned for ).....

    Shiny new is great for the ego, and even depreciation, but you can't beat an older established and proven (preferably on it's own title) place longer term, live in it initially, and reno to improve equity prior to moving out (and get a registered valuation) to later claim depreciation :cool:

    Have you read any of @Terry_w tax tips ?
    (you will lose hours, then days by the time you get it, but one of the best things you could spend the next 3 weeks of spare time reading !).

    Property is a long game (many smart decisions can be ruined by one bad decision) :p
     
    Last edited: 19th Jun, 2020
    SophieH likes this.
  15. S1mon

    S1mon Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    604
    Location:
    canberra
    It is nice to gain 25k for nothing but probably need to think a little more wholistically. What is the average annual price movement for houses and apartments in canberra? I am only guesssing but i would assume 0 for apartments and 5% PA for houses over the last 10 years or so. If your spending 500k then 5% is 25k and if you buy a house then only after one year you are back to even but have a much better asset (imo).

    Strata is a killer too mate. Even if they give you some nice low figure for year 1, give it a few years and will be a lot higher imo.

    Can you show us some cashflow calcs with an example purchase?

    probably 2k land tax, 1.5k rates, 4k body corp (acknowledging you will pay rates and land tax on a house also).

    If you move in first you might lose your depreciation given items are 2nd hand? not sure on that one (but yes capital works is probably the main deduction anyhow)

    anyhow point being, make sure you do the maths on yearly cashflow and capital gains (realising that is crystal ball stuff but it is safe to say there are plently of apartments going up) and some comparisons to established houses before you jump in so you have realistic expectations
     
    Curoch likes this.
  16. The Gambler

    The Gambler Well-Known Member

    Joined:
    17th Jan, 2017
    Posts:
    298
    Location:
    The Sunshine State
    This x 100.

    It's nice to have the gym and pool and BBQ and Tennis court etc, but you can't decide to not want those things. You have to pay for them even though you may not use them. And, boy, do you pay for them! Strata/BC is like a hidden cost. You know it, but you don't quite understand it fully until you start paying it. I was lucky that for my first IP I got really sage advice. If you're buying an apartment, make sure the BC is low otherwise you'll be selling it within a few years. If it's got an elevator, be prepared to pay a lot of BC.
     
    Rich2011 likes this.
  17. Ben43

    Ben43 Well-Known Member

    Joined:
    28th Feb, 2019
    Posts:
    81
    Location:
    Sydney
    Please for the love of God don't buy an apartment in this city (Canberra). Nobody is responsible for anything. Not the builder, not the certifier, not the government - nobody. I won't provide detail here but there is another unit complex in this city that should hit the media soon. The poor owners have already paid $500,000+ in engineering reports, the owners corporation is at war, the building is falling down, there are serious structural issues to the point that emergency structural supports are being organised right now and nobody is responsible except the poor owners. How it hasn't yet made the media is beyond me. I'm so glad I"m not an owner - it's killing my relative who is going through this. Don't. Do. It.

    Houses are OK though.
     
    Dave Radelaide and S1mon like this.
  18. Ben43

    Ben43 Well-Known Member

    Joined:
    28th Feb, 2019
    Posts:
    81
    Location:
    Sydney
    ^ and no, not a Geocon property.
     
  19. Todd

    Todd Well-Known Member

    Joined:
    16th Oct, 2016
    Posts:
    298
    Location:
    Canberra
    I just spoke to 2 people in the last week re apartment block defects in the ACT:

    - the infinity towers in Gungahlin (discussed in this thread) has a huge amount of issues. Owners looking at over $1 mil of issues to be rectified. 5 years old.

    - the owners of 77 Northbourne Ave - “ The Avenue” - up for 50k each in rectification works. This block about 10 yrs old.

    it continues to happen in Canberra - there are plenty of other blocks with issues currently. Rarely does a builder seem to be able to complete a complex without some minor and/or major problems.
     
    S1mon likes this.

Buy Property Interstate WITHOUT Dropping $15k On Buyers Agents Each Time! Helping People Achieve PASSIVE INCOME Using Our Unique Data-Driven System, So You Can Confidently Buy Top 5% Growth & Cashflow Property, Anywhere In Australia