When you buy property off-plan, you buy a home that hasn’t been built yet. It’s important to do your research beforehand so that you avoid any pitfalls and make a good investment.
If you’re looking for advice on how to buy off plan property, the main idea when buying off the plan is to buy at current prices and have the property appreciate in value by the time it is completed a year or so later. In the current property market, you can make a profit of around 10% with an initial deposit of 10%.
Off-plan property launches
Off plan properties are usually marketed initially through a launch. If you attend, you can examine the off-plan marketing material and in some instances do a walkthrough of a show home. The show home is designed to be a typical property equipped with the level of specification you can expect from your own investment.
The earlier you get access to the property for sale, the greater the chance of securing one of the better units and of getting a discount on the price. Your negotiating position will be determined by the demand the development is attracting. The higher the demand, the less chance you have of negotiating the price down.
You can search for thousands of new build homes from the country's leading developers right now on Private Property.
Do your research
As with any property purchase, particularly if you're looking to let the property afterwards, it's important that you do your homework thoroughly. If you fail to research the development, surrounding area and the potential demand for rental property before you buy, you could leave yourself in a very vulnerable position financially. So, what things should you consider before buying a property off-plan?
Location
It's a cliché, but it's all about 'location, location, location'. It's a critical factor in understanding the potential of the property. Is the wider area being regenerated? Is the necessary infrastructure in place already? How close are the appropriate transport links, shops, restaurants, parks and schools?
Know your market
If you plan to let or sell the property on completion, you should establish the target market for the type of property you're planning to buy. Discuss this with local estate agents to understand where the demand is likely to be coming from. It's also sensible to establish how many other units have been sold to buyers planning to let them out upon completion, as your property could end up competing with a large number of other properties in the same development.
Price
You should also try and see what similar properties in the area are being sold or let for. This will give you an indication of the possible return you could expect to see when you come to sell or let the property. Be aware, however, that the market can change a lot over a 12 month period, so you can't always be certain that you will eventually achieve the prices being realised in the current market.
You can search for property to buy or property to rent in the local area now to see what asking prices similar properties are being marketed at. In some cases, the developer will guarantee a certain value of rental yield in the first year or two. Find out what's on offer.
The property
Look at the details, dimensions and specifications of the property. If you're looking to sell or let upon completion, will the property be suitable for the target market? A family will have slightly different requirements from a single professional, for instance. Make sure the property is suitable for the market you are hoping to attract, whether buyers or tenants. Also, find out if there are likely to be any additional charges associated with the development.
READ MORE: Great care essential when buying off plan
The views from the property are obviously more difficult to assess on a property that has yet to be built. However, you shouldn't rely on computer generated images or the developer's sales pitch alone. Try and visit the actual development plot and check out where the roads are, and work out where your property will be and what the views are likely to be like from the finished product.
While not always possible, try to secure a property with one of the best positions, as you'll be rewarded with better rental yields and capital appreciation. Try to find a property with a unique selling point, such as a nice view, parking, or access to outside space.
Assess the property market
Research local property prices to find out how the market has performed over the last few months and try to gauge the direction of prices.
Originally published on www.primelocation.com
For more news and advice on buying off plan property explore the Private Property website.