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Off Plan Property 101: What Every Investor Needs to Know
When a property is purchased before the rest of its building area is completed, it is deemed an “off plan” property. In other words, the property has been bought only based on the buyer having viewed the plans and structural drawings. In recent years, this has become an increasingly popular way to invest in real estate.
Lucrative property investment
The primary reason for purchasing a property off plan is that the procedure is generally seamless. Investing in a property that is newly constructed means that you are likely to encounter fewer maintenance issues than when purchasing a resale home. Moreover, investing in an off plan home can have many very lucrative benefits for you as a property investor.
Small investment - big return
Foremost among the advantages of purchasing an off plan property is that the purchase can be made with a small investment, often just a couple of thousand dollars. When you purchase a resale home, often you are required to make a larger down payment.
Sell before completion - flip
Another advantage to this kind of real estate investment is the potential for growth in the future. You can even sell the property before it is completed, a scenario that has the potential to make you a good deal of money. Not a bad deal when you consider you had to put out very little effort to make it happen!
Customize
For the control freak in you, off plan property investing allows you to make changes to the property to meet your needs before it is built. Be warned, however, that the kinds of changes you can make will largely depend upon the developer. But you should be able to make changes that will allow your property to stand out among the others in the development, which is always a good idea when you want to attract buyers.
Don't pay too much
One disadvantage of off plan property investing is that because of the fluctuating nature of property prices, the price of your property could dip below that which you paid for it. This is not a risk exclusive to off plan properties, though. It is a risk you run with any real estate investment.
Pay what it's worth today
Further, another risk in buying off plan properties is that in many cases these properties are overpriced. And because an off plan property is not yet built, it can be difficult to ascertain its real value as compared to other similar properties. Don’t get stuck in a bad situation. Make sure that the developer you are buying from is reputable and has good financial standing.
Play the percentage game
One last caveat about off plan property investing: Try to find out how many of the homes in the development are occupied by their owners. You don’t want to buy a home (with the intention of reselling it) in a development where everyone is doing the same. When a large percentage of the owners of other homes in the development intend to sell or rent their properties, the situation will become saturated, and you will be forced to lower your asking price, thereby potentially cutting into your profits.
Do your homework
When investing in an off plan property, as with any real estate investment, it is imperative that you do your research. Doing so will ensure that you aren’t blindsided by any surprises and will keep you from ending up in a less-than-profitable situation. Doing your homework will help you make decisions that could turn an off plan property investment into a profitable one. Failing to do some legwork could land you in a bit of investment hot water.
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