Why is off-plan property so popular?
Published on 25th April 2008 by Andrew Ward
Why is Off Plan Property so popular with Investors?
To purchase a property "off plan"means simply to make the decision to buy a property before it is built. Many people have done this when buying their own residential property in order to have an influence on the finish. However, for theproperty investor the "off plan" option has a huge significance. The benefit to the investor is that prices typically increase as the development property progresses, on larger sites there is a marked increase between each phase of the development.
Just look at some of the current properties we have available for members to see why you should register today:
Why is Off Plan Property so popular with Developers?
Developers need to secure their own financial position, a good start to the sales and marketing effort is essential. In all forms of retail, discounting has long been the most effective method of moving stock quickly; houses are no different. A property investor will readily see the opportunity for a discount and buy their property before it is built.
How does buying Off Plan work?
To secure the property off plan a deposit will be required, which means that whilst the Investor reaps the benefit of the capital growth during the build phase (usually between 6-12 months in the UK and 2-3 years Overseas), they will have only outlaid the deposit rather than the full purchase price.
As this is a business decision, and therefore made with the head and not the heart, it stands to reason that the information needed to make the investment decision is fundamentally different to that needed to buy your home. The developer's status, history and financial security are all important, as are the plans, floor layouts and building specifications. This will rarely include the glossy marketing material, but this is a small price to pay for the potential savings that can be achieved by buying at this stage.
Flipping
When the property is built the investor still retains the option to complete the purchase, and benefit from a rental income or sell and realise the capital growth that has been achieved during the build. Selling before the completion of the property is call Flipping. Whilst flipping is popular with some Investors, it is not our recommended route as we see property investment as a medium to long term strategy where capital growth is the major feature.
Summary
Investing off plan can be an excellent way for a new investor to approach the property investment marketplace. As always, there is research to be done to ensure that the property being bought will provide a good return on the money invested. Overseas property investment, due to longer build cycles and better growth potential, usually provides a better return on investment. This is where using an organization like Ward & Co comes into its own; using the expert advice and the access to opportunities available to our members, a new investor can move forward with confidence and start to build the portfolio of property that can secure their financial future.
Andrew Ward
Set up Ward & Co so that ordinary people could secure their financial futures through Property Investment. Pensions, ISA's, endowments, stock & shares have failed to deliver this and yet at the same time property in the UK and in some Overseas locations has continued to rise steadily.
