Singing Pig

Off-Plan Property Investment

Investment in off-plan property is increasingly common, due to the large number of new complexes being built as well as the large potential for profit. This article will tell you what off-plan investment is, and what the advantages and disadvantages are of investment in off-plan property.

Off-plan investment property is simply property that is bought before its completion. You buy the property from the outlines of what the property will look like, hence the term ‘off-plan’. Each house or apartment is given a plot number, as there is usually no postal address for the property until completion.

There are many advantages to investment in off-plan property, including:

Investment in off-plan property is often done at the drawing board stage or initial stage of build then you have the potential to make considerable input into the internal layout and finish of your chosen property.  You can usually change where the internal walls will go, the size of the rooms, and the paint finish of the property. This gives you the customisation levels of a self-build property without having to pay an architect.

Off-plan property investment allows you to secure a property at the market price today. However, by the time the property is finished prices may well have gone up, and so you will make an immediate profit on your investment once the property is finished. Off-plan properties are often also offered at prices below market value, in order to pay for the building costs.

Many developers allow you to pay the cost of the property with instalments throughout the build. This means your investment in off-plan property does not cost you a large sum of money in one go. You can secure a high value asset for very little initial outlay.

One way to make money from investment in off-plan property is to sell the property before you even finished paying for it. With off-plan property you can sell on to someone else before everything is completed, meaning you don’t have to finish all your payments, but can take advantage of any increase in housing prices since your initial outlay. Although investment in off-plan property solely for this purpose can be risky because the market can go down as well as up, if you are confident in the property you are buying then it can work out well.

As well as there being many advantages to investment in off-plan property, there are also many disadvantages, including:

Investment in off-plan property can be risky, because you are buying something that is unfinished. You are essentially taking a risk on that particular developer, so you have to be sure that they are trustworthy. You need to know that they have the finances and expertise in place to complete the project. Before your investment in off-plan property you should view other examples of properties that the developer has completed, and speak to other consumers who have bought off of them. You should also get a guarantee about the builder’s financial status written into your contract.

Before you go ahead and commit to your off-plan investment property, you need to know how secure your investment will be. The contract you sign needs to be watertight, and it is a good idea to get independent legal representation throughout the building process. You need to know that if anything happens to the builder, that you will still have your property or get your money back. One thing to remember is that by buying off plan and paying in instalments usually the deeds are not drawn up in your name until completion. This means that until completion the builder can re-mortgage the land that your property is on, and then you cannot take ownership until this lender has been paid.

Although the building may look great, it is important to have legal assurances of the build quality written into your contract, covering both the internal and structural elements of the building. As previously mentioned you should also look at previous properties built by the developer to get an idea of quality.

If your investment in off-plan property is in an area where there is a lot of development, you need to be certain that once everything is finished the area is going to look good. If you later find out that all the surrounding development work is industrial complexes or factories, the value of your property could be severely reduced. If you see other developments in the area, go and check them out to see what they are building.

Investment in off-plan property requires patience, as it is often months or years before you see the benefit from all the money you are putting in and the building is completed. Despite the risks, investment in off-plan property can be extremely profitable, and gives you the opportunity to get the property you want at a lower cost.