Off-the-plan investors should apply these top tips to mitigate the risks and boost the upside potential. Photo: Glenn HuntForearmed is the way to go if you’re considering an off-the-plan investment in these trying times for attached housing.The signs have been bad for this sector of late, with the concept of oversupply looming large, but off-the-plan properties are still finding eager buyers, and not all are bad investments.Off-the-plan can apply to low-rise suburban units, townhouses, detached dwellings and prestige owner-occupier apartments too, and the rules around each are similar.To help, Patrick Nolan, head of Home Loans at ME Bank, has compiled some top tips to ensure your off-the-plan dream doesn’t become a nightmare. 1. Timing is everything “In a rising market, buying off-the-plan can be a masterstroke,” Mr Nolan said.“You’re committing to a property at today’s prices and, if all goes well, by the time the development is completed the place will have risen in value providing a rapid capital gain.”Of course, if your timing is like that of a lousy conductor, your real estate symphony can collapse into the financial pit.“If values weaken, off-the-plan buyers can be left paying more for the property than necessary,” Mr Nolan said.“The only way to avoid this downside is by thoroughly researching the market to make an assessment of how it is likely to behave. Bear in mind, the longer the time to completion, the harder it is to estimate how property values will move.” 2. Use your time wisely Buying off the plan effectively means a very long settlement. Use this time to build up your war chest, said Mr Nolan.“A 10 per cent deposit will usually secure an off-the-plan property. “Once this is paid, off-the-plan buyers have a window of opportunity to ramp up personal savings and this can mean taking out a smaller home loan with less to repay each month.”Just remember — the keys are discipline and planning. 3. Check the specs While at the end of the transaction you will own a tangible piece of real estate, in the beginning you are making big decisions based on the specifications.“Buying off-the-plan means committing to a property you cannot physically inspect, and the display suite could differ in layout, size and finishes from the apartment you’re signing up for,” Mr Nolan said.He said carefully check the specs outlined in the sale contract because there are no guarantees they’ll match those in the marketing material.“Ask lots of questions about finishes and fittings like blinds, curtains, tiles and carpets to get a clear idea of what you’re buying,” he adds.Remember you’re also purchasing aspect and view, so pay careful attention to the physical location of your property and the surrounding land uses that may affect it. 4. Have the contract independently reviewed. More from newsMould, age, not enough to stop 17 bidders fighting for this home5 hours agoBuyers ‘crazy’ not to take govt freebies, says 28-yr-old investor5 hours agoIt’s the bedrock agreement parties refer to — particularly when there’s a dispute. Make sure yours is watertight and you are well across all the clauses — particularly those that could put you at a disadvantage.“Resist the urge to sign on the dotted line until you’ve had the contract of sale thoroughly checked by a solicitor or conveyancer,” Mr Nolan said.“Off-the-plan contracts are usually more complex than for established homes — often with clauses that favour the developer. Your legal adviser can explain any clauses of concern.” 5. Look to the future “On a property that hasn’t even seen the excavators arrive, you could be looking at an extended time to completion,” Mr Nolan said.Life can change dramatically over these time frames. Try as much as possible to factor future life changes into your purchasing decision.“Even if you no longer want the property, you’re still committed to buying it, and bailing out can be costly,” he said. 6. Go with a reputable developer One of the best ways to avoid heartache is to make sure your dealing with someone with a history of delivering on their word, Mr Nolan said.“Opting for properties backed by an established developer with a blue chip reputation doesn’t just make it more likely the end product will be high quality. If the developer becomes insolvent at any stage during construction, you’ll be in a long line of other creditors trying to get your money back,” he said.“Sticking to reputable developers also provides the opportunity to check out completed developments by the same company to see how well they have stood the test of time.” 7. Size matters Until such time as we Aussies become akin to living in tiny spaces like New Yorkers, you must remember there are logistic hurdles with too-small units.“Many lenders shy away from, or ask for a bigger deposit on, very small apartments — typically studio units with less than 50 square metres of floor space,” My Nolan said.This includes purpose-built housing such as student apartments which can be both tiny and subject to special lease terms or management agreements.“The key is to speak with your lender before you start looking at off-the-plan properties to know whether the type of apartment you’re considering falls outside normal lending conditions,” he said.