So you have the contract for your apartment purchase, and you're really excited to scribble your signature at the notes, however it is extremely important to carefully read the contract before you sign.
In your contract, everything, from previous requests to negotiations will be included in this document - so read it fully and read the fine print.
It is important, when considering your contract and the purchase price, that you take note of the stamp duty fees associated as well.
Stamp duty, when associated to off-the-plan apartments, is based on the land value at the date of purchase, including the value of construction on the land at the time of sale.
As has been outlined many times here on apartmentdevelopments.com.au, research is a very important tool and exercise when sorting out your contract.
A developer's previous work will reflect both their work ethic and work quality - so ask around, and find out for yourself.
High Rental Guarantees
Rental yield guarantees can often be inflated (in comparison to market value) in order to encourage people to buy.
An example as follows:
You've been guaranteed a high rental yield - at 6% gross rental yields.
Therefore the vendor has guaranteed $500 rent per week which prices the property at $433,000.
However, the actual rental market is $450 per week, which then prices the property at only $390,000.
This then means that the purchaser has paid around 10% above market value, costing around $2,500 to guarantee extra rent return for two years, giving the opportunity to earn an extra $40,500 net.
It is important to note that once the developer's rental guarantee expires, it will return to market levels.
Proof of Progress
This is designed to make sure that the developer has obtained the appropriate and necessary permits, and is progressing along with the development as promised.
These are all important things to consider before you sign, however, before you sign, you need to finalise your contract.
The Finalise Your Contract article will follow later in the week.