Australians love real estate. Approximately one in seven Australians own one or more investment properties. They know that real estate is a proven, tax effective wealth creation strategy. In Australia, and in most other countries, the majority of millionaires made their money from real estate.

There is one investment strategy that can deliver superior profits to conventional real estate purchasing, and that is buying off the plan.

When you buy off the plan you enter into a contract to purchase a property before it has been constructed. That means:

• You buy in today's market, but settle in tomorrow's market.
• If the market has improved during the one to three year construction period you stand to make a significant gain on settlement.
• In some Australian states, stamp duty is reduced or eliminated for off the plan purchases.
• With new properties you can claim the maximum depreciation allowances, thereby making off the plan purchases very tax effective.

When developers finance their projects they have to convince a bank or other financial institution that their project will be viable and profitable. Generally banks will not lend to developers who do not have a substantial number of pre-sales (another term for off the plan sales). Developers obtain pre-sales by offering to sell their real estate at a price below the prevailing market price. This is because from the developer's point of view, pre-sales lead to finance, which leads to construction which in turn leads to profits. It is in the developer's interest to obtain pre-sales to get the project moving, and developers are prepared to drop their price to achieve this.

There is a disadvantage to buying off the plan. You cannot see and feel the finished product when you commit to the purchase and if the end result is not to your satisfaction there may not be much you can do about it. However, off the plan contacts contain a copy of the approved plans, specifications and schedule of finishes. If the purchaser thoroughly reads and understands the contract, views other projects completed by the same developer and thoroughly researches the market conditions in his area of interest, he can reduce much of the uncertainty that accompanies off the plan purchasers.

Furthermore, when a property is purchased off the plan there is a maintenance period when the developer must attend to small repairs and rectifications.

So while purchasing off the plan is not risk free, the price and tax advantages generally outweigh the disadvantages.

If you have decided that the property market is the right investment for you, then why not enhance your profits with an off the plan purchase? If the developer is selling below the prevailing market price, if the market rises during the construction period and if all goes according to plan you may well make a profit far superior to that made in conventional real estate transactions.