Buying investment property off the plan is something that is becoming increasingly popular amongst property investors for developments within the UK. When you buy a property off plan it means that you are purchasing it before the property has been built. The investment usually requires you to wait a year for construction but has benefits such as a good deal on the purchase price.
Investing in a property off-plan may seem like a risky investment, however if it is done right, it can give you a massive return on investment through flipping or rental income. The idea is that by the time the property is constructed, capital appreciation will have increased the worth of the property, making it ideal for flipping (selling on) for an instant profit. If the property market is not quite right by the time of completion or you are looking for a more medium to long-term investment, then you can hold on to the property and gain rental income.
Here are some tips that may help you with your off-plan investment:
- Do your research
An off-plan property is not as easy as going on Rightmove or other property portals because it is not built yet. If you are looking to let the property afterwards, you should definitely do your research on the development, the contractor and the management of the project. You should also research if this strategy is the best for your financial situation. You need to be willing to live without a large sum of money for a while.
- Understand the location
Say you have found your perfect off-plan property investment deal, but the location is in an area where the property doesn’t appeal to the demographic. This could mean that you experience frequent void periods, troublesome tenants, low rental yields, etc. For many properties location is key so do your research.
- Know the market
This is something that you can’t personally control, but it is something that many property investors have to deal with. A volatile market can mean confusion for investors, but knowing the local target market and understanding market forecasts can help you to predict the future of the property market and make better buying decisions.
- Legal paperwork and fees
Often time off-plan purchases can be made with a mortgage or cash, but there are legalities as well like any other property investment. Make sure you speak to a solicitor before you go ahead with the exchange of contracts to make sure that everything on your side is good to go.