Buying property that hasn’t been developed yet is not something that can be ventured into by people with a faint heart. However, very many investors and buyers have been able to reap great rewards because of this particular bravery. Buying property off-plan can offer amazing capital growth prospects.
The whole concept
The concept here is to buy property off plan within the current prices, and after the development completes some years later, the appreciation of the capital becomes worth even more than what was invested initially. This is because of the capital appreciation which will have made the value of the property in question increase. When the market is strong, you may get profits of between 10-20 percent from a deposit of only 10 percent. This is why many developers still get a high demand for the off plan kind of properties.
In most cases, the bigger companies are given the opportunity to purchase some units at a discounted rate. Later, the remaining units are opened to the individual investors during the launch. Prelaunch offers are also sometimes given to agents so as to sell to any investors who are serious and already in the database. All the off marketing material is usually offered by the estate agent, and you will have the opportunity to assess the units that are being offered through show homes. Show homes are often designed as the typical property and equipped with the specifications that you expect from the investment you make.
When you are able to access the property that is up for sale early, you will have a great chance of getting the better units and enjoying the units at discounted rates. The negotiating ability is often determined by the kind of demand that the development is getting. When the demand is high, you will have little chance of getting a lower price.
Things to do before buying a property
Just like property purchase, if you want to rent out the property after the purchase, you need to do very thorough research. You need to:
- Know more about the surrounding areas
- Know the potential demand for such a rental property
- Get to know more about the development
If you fail to do the above, you leave yourself open to great vulnerabilities, especially from a financial aspect.
Most people think it’s cliché, but location is always a very critical factor that needs consideration. Is there regeneration within the area? How is the infrastructure? How close are you to schools, parks, restaurants, shops and transport? All of these are very essential.
Know the market:
If the plan is to sell or let the property after it is completed, there is a need to establish a target market for the property you intend to buy. You can hold discussions with the local agents so as to understand how the demand is likely to be like. Get to know whether any units have been bought and what exactly the buyers intend to do with them after completion.
Get to know how much other properties within the same level are going for. This gives a clear indication of the kind of return that you may get once the property is let or sold. The market may change incredibly over time and there is no way to be certain that you will get the specific returns that you expect.