The Five Step Settlement Process for Off-the-Plan Property Investment

Once you’ve paid your deposit for an off-the-plan property, there’s nothing more to do until it’s time to settle the final mount and begin to benefit from rental income and tax advantages. It’s also probable – if you’ve made sure you’ve invested wisely  – that your property value will already have increased by thousands of dollars by the time of settlement. Here we look at this final settlement hurdle, and how easy it is to transfer the property from the developer’s hands.

Make sure your deposit is safe

Before you pay your reservation fee (usually 10% of the agreed purchase price), check the contracts and ensure that this deposit will remain in the solicitor’s trust account and not in an account that the developer can access. Home Port Properties do this as a matter of course, and this protects you from a rogue developer: if something should go wrong, you’ll be able to get your deposit back.

The whole process of buying off-the-plan is detailed in our blog ‘Buying Off-The-Plan Property in 10 Easy Steps , but the real action starts a few months before settlement is due. This is when your solicitor will contact you and advice you to prepare for settlement to take place.

Settling off-the-plan in five steps

Step 1: Organise your finance

It’s likely that you will already have obtained a conditional mortgage offer before you paid your reservation fee, and now is the time to confirm the mortgage arrangements. If you have difficulty with finding initial investment, discuss your requirements with a finance expert who specialises in off-the-plan mortgages.

Step 2: Inspect the property

Some property investors, especially those that have extensive experience investing in off-the-plan properties, will be happy to conduct their own pre-settlement inspection. However, we would always recommend that you use an independent builder to carry out a snagging inspection of the property for you.

Step 3: Get your bank accounts sorted

You’ll need an account to accept your rental income, and this might be better as a completely separate account to your personal banking arrangements. You may be best advised to open such an account with your mortgage lender.

Step 4: Organise the management of your property

By organising property management before settlement, the manager will be able to begin the process of sourcing and vetting tenants early. When the property is rented, the property manager will carry out regular inspections, ensure that rent is paid into your account, and can also take care of other items such as council rates.

Step 5: On completion date, make final payment

Your solicitor will confirm that funds can be transferred, and once the developer is paid the property is yours.

Whether you are a local investor, interstate, or a foreign buyer, off-the-plan property is an exciting and rewarding way to invest in property. If you employ a methodical approach and take advantage of expert advice, you’ll start befitting before you pay the final completion amount; then you’ll be able to take advantage of the rental income and tax advantages of investing off-the-plan.