This article on how to avoid property marketing tricks will give out information about how to get a great deal on an off the plan property, and remember that if you want a home loan you can save money with NPBS term deposits and get a head start on your home loan deposit today.
Balcony size included
When you’re reading the square footage of an apartment, you probably wouldn’t assume that the balcony would be included. After all, it’s barely part of the property, and there’s not even room for a decent grill. So don’t be fooled. Take another look at that floor plan.
Developers like to play up the amount of room you’re purchasing to make you think the bedrooms are bigger than they actually are. It’s a sneaky trick and one that will show itself when you try to rent out the apartment. If you tell your potential tenant that the room is big, but they’ll be disappointed when they see the actual room. If you have any presence online, they might go out of their way to leave you a bad review, claiming that you lied to them.
Including the balcony in the size measurement could also land you in hot water with the banks. They often restrict how much money can be borrowed based on the size of the unit. As you’re probably looking to invest in other properties down the line, you want to stay on good terms with your bank, and that means honesty across the board.
Phony rental guarantees
Some developers like to offer rental guarantees or specials to their buyers. For a period of time, usually about 12 months, the rental income for the property will be guaranteed at a certain rate. You might think that’s a pretty good deal and a safer bet, but think about this again.
If you really are purchasing a property that has reasonably high rental yields and a bottom-dragging vacancy rate, then why in the world would you need a guarantee? There should be plenty of tenants who will want to rent from you, so you shouldn’t need a guarantee.
What will happen then after the 12 months are up? Will you have to scrounge around for a tenant, leaving the apartment to stand empty? Be very wary of these types of deals because if they have to guarantee it, then it’s probably not a good buy. Even if you’re feeling nervous about finding a tenant, don’t let these schemes get the better of you.
Stamp duty free
In addition to negative gearing, a developer might offer to lower your stamp duty costs, which is a big, appealing factor for most investors. Stamp duty is usually imposed on the sale of motor vehicles, insurance policies, leases, mortgaging and any transfer of property. This tax varies from state to state in Australia so you might pay more depending on where you’re buying into, and it’s usually a percent of the property you’re buying.
As apartments often have smaller tax duties, developers like to offer further stamp discounts, potentially bringing them down to $2,000. To you, an investor just trying to save every penny possible, this may sound like a great bargain. It’ll be a great apartment and you’ll even go home with a bit of money.
But don’t let your guard down just yet. Developers tend to raise the price of the property to offset the costs, so really, you aren’t saving anything. They just want you to think you’re getting a good deal.
While we’ve covered some ground, don’t assume that every developer is out to get you. Most have good reputations and want to keep it that way. Be sure to keep an eye out for any of these warning signs, and as long as you avoid the shady developers and don’t get tricked by marketers, you’ll be on your way to building a healthy property portfolio.
About Carson Derrow
