Off the plan is more complicated than purchasing a completed property.

You need to be vigilant and push emotion to one side when you buy an apartment off the plan. Critics of OTP purchasing say many projects are based on ”wedding-cake pricing”; the developer, builder and sales agent each take a cut of the profits before buyers pay artificially inflated prices that have little to do with supply and demand.

But if you believe property will become more expensive, it could be prudent to buy into the market now. For a modest deposit, you can secure a unit scheduled for completion in 2014 at today’s prices.

Tax savings from depreciation and stamp-duty exemptions are attractive to many people, too.

Savvy OTP buyers look beyond the marketing hype and zero in on the following issues.

Who’s on the team?

Experience is a true indicator of future performance, so any buying decision has to be based on who is developing and building the complex. Check out the project team, including the developer, builder and architect. Are they reputable? Do they have proven track records?

And don’t just rely on information in the display suite or testimonials on websites. Visit completed developments and try to inspect units that are for sale or rent. Real estate data companies, such as RP Data and Australian Property Monitors, can provide reports (for less than $100) showing how often units in a building have been resold and at what price.

Research thoroughly

Be wary of developers who are new to the industry or whose earlier projects failed or experienced long delays. If you research thoroughly, you should be able to identify developers who have a track record of delivering a final product that’s noticeably different to what was proposed. Delivery is everything – up to 40 per cent of advertised apartment projects don’t go ahead, and some top-end projects are reconfigured into mass-market buildings with many more units. Also, be aware that the pitch to buy can come from a trusted financial planner or accountant, who may not disclose their commissions.

Hire a good lawyer

Pay microscopic attention to paperwork. You need a lawyer who can read the contract well, and not one recommended by the agent or developer. A lawyer can help identify A-grade developers and potential trouble spots. Developments can be delayed by planning-permit applications or a lack of finance. Some are cancelled after sales have started.

In these circumstances, a street-smart lawyer is a must-have. Be aware, too, that Victoria’s consumer affairs laws will change this year to include a new warning notice on the front page of off-the-plan contracts. Among other things, the notice will inform the buyer that the deposit is negotiable.

Weigh up the facilities

As developers strive to differentiate their products, buyers are increasingly buying extras. There’s a grab-bag of added luxuries you may or may not want, from rooftop cinemas to a concierge, pools, gyms, communal party rooms, even wine cellars. Apartments are becoming smaller in size and, although many of them are now better designed, developers are adding bells and whistles to woo buyers.

While extras can ramp up the fees paid to an owners’ corporation, investors should bear in mind that some tenants are prepared to pay more rent to live in a fancy building.

The basics still count

You can change almost anything about a property except its location, which is why location is one of the key considerations when buying. New buildings should be subjected to the same checks as established properties.Find out whether the location has generated past capital growth.

What are the prospects for future growth? There should be a healthy rental market in the area, too, as well as strong rental yield.

Posted by Chris Tolhurst – The Age on 8th September, 2012