If you are of a nervous disposition, then ‘buying off plan’ is probably not for you. If, however, you are serious about being a property millionaire and can live with the odd sleepless night, buying off plan is an option you should consider when choosing to invest in the property market.
What Does Buying Off Plan Actually Mean?
‘Buying off plan’ means a leap of faith because you are buying a property that hasn’t yet been built. You are, literally, buying the property off a plan. This ‘plan’ will generally contain details of the layout, the square footage and the specification of the property.
It is the developer’s job to tempt you into taking that leap of faith and part with your cash. In order for them to do this, there will generally be a marketing strategy which will involve glossy brochures, high profile advertising, models of the proposed development, computer generated images and an ‘all singing, all dancing’ show flat. The purpose of all this glitz is to make their product look as attractive as possible, in order to lure you into investing in their development.
Seeing Through The Glitz
It is your job to investigate all the areas, when buying off plan, that will maximise your ‘property profit potential’. A glitzy package may not always represent the best investment. This
chapter is designed to help you make informed decisions about the real selling points of a development and to help you purchase your property at below market value.
Why Buy Off Plan?
The principle reason to buy off plan is to achieve a discount of around 20% off the market value of the property. This is generally possible, especially in a rising market, because the property is only in the construction or pre-construction stage at the time of purchase. This will mean that there is a ‘lead in time’ whilst the property is being built, which will last until construction is completed and the property is ready for occupation. This ‘lead in time’, can vary from a year or more, depending on the construction schedule.
The best time to maximise on any discount possibilities likely to be offered is at the beginning of the development. It is then that you get the first pick of the units at the best price. This has involved people queuing outside a development overnight, in order to get the best deals! It is worth considering this if you are optimistic that the development will be popular (and are young enough to be able to stand it!). I must admit that I have never queued overnight but I have been up extra early and it has enabled me to get some good deals.
How Do I Know If I Am Getting The Off Plan Property At Adiscount?
Research the price of similar properties in the same location. If you consider that the developer is asking too much of a premium for the off plan property, let them know that you have done your homework, researched the area and that you consider their price to be inflated. Be prepared to put in an offer below the asking price – the worst they can do is refuse it and if they don’t refuse it, then you’ve got a property at a reduced price.
Being Invited To Buy At A Substantially Discounted Price
This is often reserved exclusively for what I like to refer to, as the ‘high rollers’, the big investors, where it is not uncommon for them to buy a hundred units at a time. Not only do they get a discount, they also put down a smaller deposit and get to choose their units before anyone else. In addition they get to choose units in different stages of the development and not all in the first phase, when the majority of the development could still be a building site, making it difficult to rent out and inconvenient to live in. Being a ‘high roller’ is what every would be property investor should aspire to, because joining that exclusive club is how you get the best deals.