How to Diversify Your Portfolio with Off the Plan Investments

Diversifying your investment portfolio is essential to managing risk and maximising returns. One way to achieve this is by adding off the plan properties to your investment strategy. Off the plan investments allow buyers to secure property before it is built, offering potential for significant capital growth. Here’s how you can diversify your portfolio with off the plan investments.

What Is an Off the Plan Investment?

An off the plan investment involves purchasing a property before it is constructed or completed. Typically, you buy the property based on architectural plans and designs, and the final price is often locked in at the time of purchase. This gives you the opportunity to secure a property at a fixed price in a growing area.

Auburn Square, North Village | Off the plan Auburn | Secure with $10k and $346 x 123 weeks

Benefits of Off the Plan Investments

Capital Growth Potential One of the biggest advantages of buying off the plan is the potential for capital growth. While the property may be purchased at a lower price than similar completed homes in the area, by the time construction is finished, the value of the property may have increased due to the development of the surrounding area. This growth can significantly enhance your return on investment.

1. Lower Entry Costs

Off the plan properties often come with lower upfront costs, making them more accessible for new investors. With flexible deposit options and the ability to pay the full amount over time, these investments may be easier to manage financially.

2. Tax Benefits

In some cases, off the plan properties offer tax advantages. Investors may be able to claim depreciation on new property constructions, reducing taxable income. This can be an attractive benefit for investors seeking to reduce their overall tax burden.

East + Cowper, Granville | Off the plan Granville | Secure with $10k and $861 x 18 weeks

3. Secured Future Investment

Buying off the plan can offer security in terms of price and location. You are essentially locking in a future investment at today's prices, which can be advantageous in a rising property market. If the area experiences substantial growth during the construction phase, your property could appreciate significantly by the time it is ready for occupancy.

Rhodes Bay | Off the plan Rhodes | Secure with $10k and $602 x 128 weeks

How Off the Plan Investments Help Diversify Your Portfolio

1. Tangible Asset Diversification

Off the plan investments offer a way to diversify your portfolio with a physical asset—real estate. Real estate tends to be less volatile than stocks or bonds, making it a reliable option for long-term growth. Diversifying into property can help balance the risks of other investment types, providing a more stable financial foundation.

2. Exposure to Different Property Types

Investing in off the plan properties opens up opportunities to diversify not just across different asset classes but also within the real estate market. You can choose from various property types such as apartments, townhouses, or mixed-use developments. Each type offers different returns, risks, and rental yields, allowing you to spread your risk across different property segments.

Rouse Hill, Bathla | Investment Property | Studio for $559,990 | Secure with $10k and $311 x 58 weeks

3. Geographic Diversification

Off the plan investments also allow you to diversify across locations. You can invest in properties in different cities or regions, expanding your portfolio into areas that may offer higher growth potential. For example, buying in emerging markets where new developments are being built can offer significant returns as the area grows.

4. Early Access to High-Demand Areas

Off the plan properties are often located in areas that are undergoing revitalisation or significant infrastructure development. These areas can offer higher potential returns as the surrounding neighbourhood improves. For investors, getting in early can mean substantial capital gains once the area becomes highly desirable.

Argo | Investment Property | Secure with $10k and $456 x 50 weeks

Coposit: A Smarter Way to Diversify Your Property Portfolio

If you are considering off the plan investments but are concerned about the upfront costs, Coposit provides a solution. With just a $10,000 deposit and weekly payments, Coposit makes it easier for you to diversify your portfolio with off the plan properties. This allows you to gain exposure to the property market without the need for large initial capital.

Marsden Park, Bathla | Investment Property | Secure with $10k and $427 x 41 weeks

Considerations Before Buying Off the Plan

1. Market Conditions

As with any investment, it is essential to research the market conditions before committing to an off the plan purchase. Market trends, future development plans, and economic conditions can all affect the potential return on investment.

The Botany Waterloo | Investment Property | Secure with $10k and $620 x 54 weeks

2. Potential for Delays

One of the risks with off the plan investments is the potential for delays in construction. While the property may be promised to you within a set time frame, unforeseen delays can push back your investment’s completion and, in some cases, affect its value.

3. Completion and Value Risks

It is important to remember that the final property may not always match the expectations set by the initial plans or design. Changes to the final product or delays in construction may affect its market value, so you should factor this risk into your investment strategy.

Castle Hill, Bathla | Investment Property | Secure with $10k and $613 x 49 weeks