Model Off‑the‑Plan Apartment Cashflow Before You Sign Anything

Before you sign an off‑the‑plan contract, you need a decision‑grade cashflow model showing: 1) the deposit phase, 2) year‑one holding costs, and 3) what happens if rates rise and rents wobble. If the deal only works with best‑case rent and tax refunds, it’s too fragile.

Here’s a simple way to build that model this week.

Build a clear, three-year cashflow model before committing to an off-the-plan contract.

1. Map the off‑the‑plan timeline and risks

Off‑the‑plan is a three‑stage cashflow story:

1. Deposit to settlement (18–36 months)
   • 10% deposit tied up.
   • No rent, but you may pay interest on borrowed deposit.
   • Construction risk: delays, rising levies/strata costs (recent ABS data shows building costs up ~3–4% p.a.).

2. Settlement year
   • Full mortgage starts.
   • Fit‑out, blinds, furniture, utilities connections.
   • Leasing risk and possible initial vacancy.

3. Steady state (years 2–3)
   • More stable rent.
   • Ongoing rate, strata and insurance increases.
   • Possible tax rule changes (the 2026–27 Budget proposals hit negative gearing and CGT).

Your model should cover today to three years after settlement, with at least one stressed scenario where interest rates are 2–3% higher and rent is 10–15% lower than you hope.

(If you’ve already got an investment unit, think of this as the same discipline we use when deciding whether to keep or sell, as in [/insights/keeping-alexandria-unit-when-you-upgrade-lender-rules-cashflow-tests].)

2. List every holding cost — not just the mortgage

Most investors underestimate non‑loan costs. Build a table for year one after settlement with these line items:

Loan and property costs

• Interest: model both interest‑only and P&I options.
• Principal (if P&I): remember this is cash out, even if it builds equity.
• Council and water rates: often $2,000–$3,000 p.a. combined for an apartment.
• Strata / body corporate: lift, gym, pool and concierge all add up. New builds can easily run $4,000–$8,000+ p.a.
• Building insurance: usually in strata but check.
• Land tax: if you already own property, model a conservative estimate.

Tenant and maintenance costs

• Property management fees: often 5–8% + GST of rent, plus letting and inspection fees.
• Initial leasing costs: advertising and letting 1–2 weeks’ rent.
• Repairs, defects, small items: still assume at least $1,000–$1,500 p.a. once the first year of builder fixes passes.
• Initial fit‑out: blinds, whitegoods, minor furnishings — often $5,000–$10,000 upfront.

Finance and admin

• LMI (if >80% LVR): either capitalised or paid upfront.
• Account‑keeping / package fees: $300–$400 p.a. per package is common.
• Landlord insurance: $350–$800 p.a.

If you run a business, keep these clearly separated from business debts and cashflow, as outlined in [/insights/separating-business-investment-personal-debts-cleaner-borrowing].