Buying off-plan is a great way to purchase a property below its actual market value which makes it a fantastic investment opportunity. The following easy questions will help you as an investor select the best units, score the lowest entry pricing and get guaranteed returns from off-plan investment properties.
1. What does buying properties off-plan mean?
Basically, an off-plan property investment means purchasing a complex before the actual construction is complete. It’s committing to an idea before seeing the final result. Your decision is made by seeing the initial plans of the property, the blueprints plus, the impression created by the artist of what the final building will look like.
For regular home buyers, buying off-plan is sometimes the only sure way of securing a home in a market where the demand surpasses supply.
Buy-to-let investors are particularly interested in such properties due to their high potential of giving returns on their initial expenditure/capital.
2. What are the benefits of investing in off-plan properties?
Most buyers are attracted to off-plan due to the promise of property appreciation. It is among the major financial factors used to determine the success of buy-to-let property investment, along with rental returns.
Signing up for a deal before the construction is complete, or sometimes even before the construction starts increases the chances of getting a low entry price. Developers offer low prices at the beginning of a project to make sure they secure buyers and investors as soon as possible.
This indicates that if you buy a property early enough in an area where house market is on the rise, there is a high probability that your investment will appreciate even before the complex is ready for occupancy. Hence, the most crucial part of an off-plan investment is getting a great location.
3. How do I get the right spot?
Since the actual property is not available for viewing at the time of purchase, identifying a location with the potential of being a successful investment is paramount.
For buy-to-let investors, they should consider the level of rental demand in that particular location. The price trend is also another factor to consider for investors who want to get low-cost entry price, but at the same time have expectations that the property will increase its value.
4. How do I make sure the property is finished to a high quality?
Obviously, investors buying off-plan properties will be looking for some assurance while the construction is still underway. Do your research, find out as much as you can about the developer and any previous projects they’ve built.
5. How is my money safeguarded?
Trustworthy developers are keen to see that your money is secure throughout the period of construction. Off-plan investments usually require you to make staged payments throughout the construction process and the balance upon completion of the complex.
Such companies inspect the work of the main contractor, including the invoices they produce, which ensures that your money goes into the work that’s completed.
A credible developer will be transparent with information on how your money is managed throughout the construction stages. You should receive regular updates either monthly or quarterly so you can see where every coin is going, the work quality as well as whether the construction is going as scheduled.
6. How does the buying process work?
Purchasing an off-plan property is an uncomplicated process. Buyers should seek advice from an independent legal solicitor that specializes in Real Estate in that particular area.
If the project has staged payments, make sure you are aware of how much is due and when. Your solicitor should be able to advise you accordingly in matters regarding payment details on your contract. As an investor, you should make sure the legal contracts between contractors and the developers are tailored to protect investor’s interests.
A successful purchase will highly depend on the advice offered by the legal advisor of your choice. The solicitor is there to protect your interests, and you should ask as many questions as you want to make sure you’re fully covered. Make sure your legal representative inspects all the contracts. This will ensure that the project is highly likely to be completed both on time and budget. You should also put the legal protection in place should the development be delayed.
7. How to identify a good developer?
A rooted off-plan developer will have a portfolio of other successful projects they’ve handled before. Timely delivery of a project also depends on the reputation and the track record of the construction company that the developer works with.
Timing is significant in the off-plan project since the sooner the construction is complete, the sooner you can reap the benefits of your investment. For this reason, it’s crucial that you do background research on the company and if possible, visit their previous projects just to be sure they stick to their schedules.
8. How can I be guaranteed the project will be delivered as planned?
You can easily recognize award-winning developers and companies that receive annual accolades for delivering as promised. When going for an off-plan property, experience and expertise of a developer is a significant factor that you should consider.
9. Who will manage my property?
If you’re purchasing an off-plan buy-to-let within a new development, typically a management company is given the mandate to manage the day to day maintenance as well as the rental returns. A good property management company can help you reduce vacant periods between rents and also ensure the complex is well maintained throughout every tenancy
10. What are the main incentives for buying off-plan?
Off-plan investments offer a wide range of benefits to buyers. If you buy in the earliest stage, you can benefit from choosing the best units. In some instances, developers sell off-plan properties at a discount. In such a case, buyers benefit from the appreciation of the property and the negotiated discount.
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