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 the property investor the "off plan" option has a huge significance.

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. 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.

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.

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 called Flipping.

Flipping is popular as Investors don't have to worry about tenants, furnishings, rental collection or mortgage and insurance payments. Either way, Off Plan often provides a very good way for investors to start their property investment portfolio.

Take advantage of some of our outstanding off-plan opportunities by registering with our Investment club, it's free to join. - Register