- What is off-plan property?
Off plan property simply means buying property before construction has even begun. This means that you will have to wait for the construction process before you can complete, which could be quite a lengthy process.
Due to the risk involved many investors are understandably put off by buying this type of property. The biggest hurdle being, how can you buy a property you have never even seen?!
Getting a mortgage on this type of property is notoriously tough as lenders do not want to commit their money to a property that is not yet complete. This means that buying off-plan is more suitable for cash buyers, which is not an option for a lot of investors.
As with all types of property builds, there can be delays with the construction works. With a project so big and a multitude of contractors working on different parts of the build, some delays are almost inevitable. Unforeseen circumstances, such as weather and ground conditions, can also slow down progress. As an investor, this is something that you need to factor into your expectations.
Though there are risks in buying off-plan, there are significant benefits that you should take into consideration.
Buying property in a market where prices are going up, with increasing demand from renters, can pay off dividends. Investing in the right property can significantly increase its value meaning that you are left reaping the rewards when completion hits.
However, this is not the case for all off-plan property. You will need to do your research to ensure that not only is the property right, but the location and the local demand. A good indicator is to see how much money is being spent in an area. Money spent on transport links, amenities and redevelopment will attract companies and people to the area – and these people will be looking for somewhere to live meaning that your property will certainly gain that all important capital growth in years to come.
Buying off plan is also a very low maintenance options for many investors. The property will be brand new and often come with furniture packs meaning that letting out to tenants is an easy and stress free process.
Buying property that is already completed upon purchase is definitely a lower risk option. You can be safe in the knowledge that the building has been built to the quality and specification promised and you can even arrange a visit in person to inspect it before you buy – leaving you with complete peace of mind.
Unlike off plan property, in which a developer offers a whole scheme of apartments for you to choose from, completed property can be harder to come across. Finding them in good locations that will attract tenants and a solid yield can also be challenging and competition from other buyers looking for the same deal can be high.
This option is perfect for those who want to start generating a rental income straight away.
GURU top tip: It’s important to remember that property is a medium to long-term investment and you should not rely on property prices rising straight away. The longer you can afford to commit to a property the better. As the equity builds you can even consider purchasing a second investment property. Then you’ll be a real expert in Property investment!
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