One of the threshold questions concerning management is whether you should buy a business ‘off the plan’ or not.
When you purchase an existing business, you reward yourself with a greater amount of certainty. You can see and feel it, and you also get a good initial view of what’s good or bad about it. Buying off the plan, on the other hand, means directly buying management rights from the developer.
What “Off the Plan” Means
Buying off the plan requires more diligence on the buyer’s part, but it compensates through lower purchase prices. It is also a more difficult process compared to current management rights in Brisbane. The contracts included require a great deal of details on the property you are buying.
It all begins with trusting that the developer will delivers on their promise. Make sure you get the best deal by researching other developments by said developer and getting a clear view of all past work. A developer’s character is vital, especially if you are in for the long-term.
You Need Documentation
In some cases, negotiating additions to manager units and rights agreement is possible. Developers who sold units prior to selling management rights might hesitate changing the agreement out of fear for lost sales. This is where you need a thorough review of managements rights agreements. A lawyer experienced in negotiating arrangements is necessary for a seamless transaction.
Buying management rights always relies on the proposed net income and the number of units you allow in your pool. Due to the numerous mechanisms involved, proper documentation ensures your understanding and protection.
Some marketing agents have the tendency to oversell units, which results in false expectations for investors. In case those expectations fail, owners will come to you.
The Bottom Line
Buying off the plan is not ideal for inexperienced investors. The entire process requires setting up a business from scratch, as well as dealing with owner confusions and building defects. Still, benefits of this option include compensation of lower price and less headaches. Also, if you structure the plan correctly, you need not pay stamp duties.
So if you wish to buy off the plan, learn more about it first. This way, you get the most out of the property and the rights you buy.