Investing in a plan-off property becomes increasingly popular on the market in the last couple of years because it comes with different benefits and unique perks. It is a very budget-friendly option that will provide you an opportunity to get early discounted access to properties that are not completed yet.
The number of off-plan property investors raised because many saw an excellent business opportunity in this. If you are thinking about becoming a property investor you can check for more information about Off plan property investment in Birmingham.
Developers invented this plan with the purpose of selling construction to raise capital. However, even though this is an excellent investment strategy that is worth considering, there are a different couple of questions that you need to ask both yourself and the developer of the project before you agree on off-plan property.
1. Do you have the patience to wait and what are your expectations?
One of the primary questions that you must think about is whether you have the patience to wait until the property is done. In most cases, investors are looking for opportunities that will provide them profit right away after their investment starts. This is not the case with purchasing an off-plan property.
You must wait for the construction to be completed for a couple of months or even years. The time depends on the project and the developers. When you buy some property that is completed, you will have a chance to rent it right away and in this case, you will not know how much you will wait to start receiving rental income.
Investing in an off-plan will provide you with an incredible discount compared to the properties that are already completed. Therefore, it all comes to you and your expectations. Are you willing to wait to start earning money and take advantage of the reduced price or do you want to buy a property that will give you a chance of renting right away at a much more expensive price?
2. Are you prepared for the risks?
If you want to start with this investment project, you must know that every construction project can come with the element of risk. In general, when it comes to the properties, the risk of not completing the job is very low. However, something can still happen that will disrupt or even cancel the whole project. Therefore, if you want to step into this business, you must be tolerated the risk and be ready for it at the beginning.
These are not investments that are completely safe and secure because of many different reasons. That is why, you primarily need to find reliable and experienced developers that have good portfolios for the collaboration and secondly, to be okay with a risk element. We are not telling you that you should look at this opportunity in a negative way because after all, this can truly lead to a great outcome that was worth waiting for.
3. What does the developer’s history look like?
Logically, before you agree on the collaboration with a specific developer, you must be ready to spend some time evaluating their history and experience. You need to find out whether they have completed similar projects in the past and how successful their projects have been. Despite this, you need to check whether they are completing the task on time and within budget.
Lastly, it is significant to find out more about the quality and the construction standard of their completed projects. All of the mentioned will provide you with a realistic picture of whether or not developers are reliable and credible and whether you should collaborate with them. When you see that they are experienced and successful in their business, you can be relaxed that everything will go smoothly and fine with minimal chances of risk occurrence.
4. What happens to your deposit and how is your money protected?
Primarily, you need to check how much you need to pay for the off-plan project and see whether you are happy to invest that amount of money. It is most likely that you are going to pay a reservation fee so you can secure your property. In other words, you will select the exact one that you want to get. Along with this fee, you will give a cash deposit which is a part of the contract and this deposit usually goes between 20-30% of the total purchase price.
You also need to make sure that your deposit is going to be protected right away in the case project fails or developers disappear. For instance, some developments are approved by NHBC which will provide you a guarantee that you can be completely safe in the terms of giving your deposit.
5. What is the timeline?
No matter when you are investing in the off-plan property, whether it is in an early or late stage of construction, it is important to ask about the timeline. When you find out when it is going to be finished, it will be easier for you to decide whether you want to invest in it. You must be aware of the fact that those projects that are larger and more ambitious will take more time.
This means that if you want to avoid any type of delay, you can invest in some other type of project. Additionally, in case you are planning to purchase the property with a mortgage, you should know that most lenders will provide you with a mortgage offer six months in advance. This means that if the deadline is longer than six months, you will need to find another option.
6. What are the incentives for buying early?
This is very important for you to know! You are primarily giving developers money for something that is not yet built, therefore it is normal to find out what are they going to offer you in the terms of incentives. They can cover legal costs and provide you with free furniture packs for instance. There are so many other incentive options that you can negotiate about.