VIC Off The Plan Land in Victoria

My wife and I are looking to purchase Off The Plan Land (strictly as an investment) within new suburbs being developed around Melbourne City.

We were wondering if anyone had experience with such purchasers and what advice would you give to beginners.

 

@MARK1971

I'd consider the risks associated.

Questions about the property:

• When will the land be registered?
• How is it a good investment for YOU? There will be no rental income
• What's next after you're done with THIS purchase?
  
• Where is the market heading? Had someone purchase land for $360k odd in VIC and the valuations 2 years later came back at $300k. Top it off the developer decided to offer "rebates" to settle. Guess what? The banks reduced the valuation by the rebate amount. So if the rebate was $50k, the fair market value was $250k per the banks!

Key question about your goals:

• What's important about investing in property for you?

 

I had a client who contracted to buy land which went up in value and then the developer delayed completion of the subdivision so they could rescind the contract on the sunset clause and resell for a higher profit.

I have also had other clients unable to settle and trying to find a buyer for 10% less than they contracted for - to avoid being sued in addition to losing the deposit.

 

"Don't do it".

 

Why? Have you personally bought some off the plan land?

 

Nope and I never would. I consider it just straight up speculation/gambling with the odds stacked against you.

So I prefer blackjack myself.

 

Are you intending to build on the block too?

 

Not sure.. why?

 

If you are gonna build a house, why not? If not, are you gonna pay 300K with your own cash? If not, just count your losses.
One more point relates to how many developers stipulate in their contracts that you MUST build a house within 2 years or whatever. So, you can’t sit on this land forever.
Btw, some developers say in their contracts that you must build a house and can’t simply re-sell the land without their permission

 

Thank you for your comments. Good to know. Thank you very much!

So to guard against both excellent points then:
1) ensure the contract with the developer allows you to re-sell the land without their permission &
2) Make sure there is no covenant on the build timeframe.

Correct?

 

Technically yes.
However, my point was that if you get a loan from the bank to buy this peace of land and don’t plan to build a house, you would highly likely lose.
If you plan to build, that’s a different story ...

 

What suburb is this block located?
How many sqm?
What year was is purchased?
Who was the lender?

 

Hi Mark1971, several years ago, we put a deposit for a good sized vacant lot at a new well-planned suburb. No problem with loan approval even though our lender had preferred that we acquired land with established house on it. It was our oversight. Developer did stipulate that we had to build within 2 years. Suddenly there was additional construction loan to worry about and we didn't have the luxury of time to rush though building within the short time frame. We managed to get our refund because there were many keen buyers eyeing at the same lot.

 

Thanks for your story. much appreciated!!

 

Few threads about his, including new vs old. There is no right or wrong, depends on your strategy. Few people did well with H&L on this forum. Have a read here: New v Established

If you buy H&L you need to source the land first, good location, good estate, good price. Then shop for a builder. Set H&L packages you usually overpay.

 

Hi
If you know the area well,

If your intentions are to build

If you can see value

If you have cashflow to proceed despite changes in your financial situation at the time.of settlement.

If you know how to work with buildimg and end up with 20k savings just by choosing the right builder.

If you can capture growth areas

If you can pick land cheaper than market price.

If you know you are paying 25k to 30k as a premium for new build and can recover these costs.

By all means go for it.

How can I say? I have been following pretty similar approach since past 5 years to get about 1.1m in equity by now.

Regards