Are you looking for a new way to invest? Try buying an off-plan property. An off-plan property is a type of property that has not been built or completed yet. It’s a popular investment since you can buy a property at its current price but can appreciate it in the future.
However, although investing in an off-plan property comes with various benefits, it also has risks and challenges, so there are things you should do before diving in.
In this article, we’ll give you some tips on how to successfully invest in an off-plan property.
1. Know the Developer
Getting to know the developer is the first step you should take before investing in an off-plan property. It’s a huge plus if you can easily find the developer’s name online. On the other hand, if they barely appear on the search engines, maybe it’s time to move on to another property.
Meanwhile, once you can access information about the developer, make sure to look into their past clients, projects, and reputation. If you can spot significant comments that can affect your investments, you should think about it first before proceeding.
2. Secure a Great Location
The location plays a significant part when investing in an off-plan property. Look for areas where there’s a strong demand for rentals and homeownership. Since the property is yet to be completed, you’ll still need time before it’s available in the market. Unfortunately, if you see signs like most properties are off-plans or none of the plans get started, it may not be a good idea to invest in this area.
Instead, try looking for a location with nearby amenities, such as malls, groceries, schools, and parks. Another option is if the area is under development, and many investors are signing in.
3. Understand the Payment Plan
When planning to invest in an off-plan property, understanding the payment plan is crucial. But before anything else, you should have enough money to invest in a specific property.
Usually, off-plan properties offer a flexible payment plan. It can be an instalment while the property is under construction, or it can be based on milestones. However, if that’s the case, you should have the money to pay at the given time.
If you think the deal is too good to be true, it probably is, so make sure to read every part of the agreement, including the small prints, before signing anything.
4. Get Legal Advice
Similar to investing in other properties, buying an off-plan property requires legal assistance. Even if you’ve consulted with real estate agents, having a lawyer is a must, especially since the property is yet to be completed.
When getting legal advice, make sure to hire a real estate lawyer, specifically the one that specialises in off-plan properties. That way, they’re already familiar with the usual payment plans, requirements, and potential of the property. In addition, the lawyer can identify whether the developers have completed the requirements before and during the construction. If not, legal actions must be taken.
5. Know the Risks
When investing in an off-plan property, the main goal is to achieve potential returns. Unfortunately, you should consider the risks, such as the current market condition, construction delays, and site problems. If your plans are not met, you should be prepared.
In terms of the current market condition, you should know that if the market is strong during the time of investment, it’s possible to increase the value once the construction is done. Meanwhile, there’s also the hidden cost that you may encounter during the construction period, so be aware of the charges along the way.
6. Check the Quality and Specifications
What’s the plan? Before investing in an off-plan property, review the property specifications and building plan. If you’re okay with it, you can proceed. However, your responsibility doesn’t end once you sign the contracts. As the owner, you should constantly check the progress and assess the quality of the construction. Once it’s done, checking the finishes is also a must.
7. Monitor Construction Progress
As mentioned, monitoring the construction progress is a must to check if the developers are on track in terms of the agreed timeline. You should have a a copy of the detailed plan so that you can monitor whether they’re on time based on the given schedule.
8. Create an Exit Strategy
Did you change your mind? Did something happen that you need to sell your off-plan property before completion? In this case, you need an exit strategy. Having a well-planned strategy allows you to maximise the return on investment (ROI). However, before planning, you should be aware of the current resale value, demands, and other factors that can affect the sale and value of the property.
Final Thoughts
Buying an off-plan property is a great investment, especially if you know some things about real estate, and you’re aiming to diversify your portfolio. However, you should also take extra precautions and incorporate the tips listed above for a more successful investment.
