Jun 09 2008
Off Plan Property - How to Avoid the Mistakes And Make Huge Profits!
Do you want to learn how to buy off plan property successfully?
This article will help you to understand all the ins and outs regarding buying off plan properties, especially if you plan to buy off plan property in the UK. After reading it you should be much clearer on the advantages and disadvantages of buying off plan property. That way you will be better equipped to make profitable decisions.
Before we start let us be clear on what exactly off plan property is.
When someone says they are going to buy off plan property they normally mean that they are going to buy a property before it is completed. In essence, they are buying from the look of drawings or a plan (hence the term off plan).
What Are Some Advantages of Buying Off Plan?
ADVANTAGES
- You can secure a property for very little financial outlay. You can secure a property that is worth hundreds of thousands of pounds without using much of your own money. Sometimes you can actually secure these properties by only putting down as little as 500 or less.
- The capital growth potential can be huge. In many instances, buying off plan property allows you to secure the purchase of a property that you will complete at sometime in the future, at the price it would sell for if completed today, which hopefully is significantly less than it will be at the time of completion.
- You can sell the property before completion. Many property investors are making huge amounts of money by selling off plan property before they even have a mortgage on it. When you know what you are doing this can be done quickly and easily using tools like assignable contracts.
- You can make changes to meet your own personal specifications. Buying off plan you can sometimes choose what style of kitchen units you want, what light fittings you prefer and a host of other things that can make your property unique. In some instances you can even specify where certain internal walls etc will go.
- You get a guarantee. You should get a guarantee that the quality of the building work meets industry standards. This should give you piece of mind and mean that any maintenance and repair bills should be at a minimum for the first few years at least.
That covers some of the advantages of buying off plan property successfully. Now, let's take a look at some of the disadvantages. Under disadvantages I have also listed some things to avoid.
DISADVANTAGES
- Property prices can go down as well as up. It isn't unheard of for property investors to have paid, say 200,000 for an off plan apartment and when it comes to completion, the apartment is only actually worth about 185,000.
- Buying over priced properties. Since comparables for off plan properties are difficult to come by, if you aren't careful, it is very easy to be sucked into buying properties that are overpriced.
- Being to trusting of the developer. Make sure you are dealing with a reputable company and that you have security in place if the developer goes bust half way through the development. Also, make sure you have your own survey done and don't just trust the one done by the developers surveyor.
- Over Saturation of Investors. One of the most important things to be on your guard against is when there is an over saturation of investors buying into a development in comparison to owner occupiers. This is a recipe for disaster, lost money, heart ache and head ache for investors.
The bottom line with off plan properties is that - yes, there still is a lot of money to be made. However, you need to be aware of the current property market conditions and be able to adapt your property investing strategy accordingly.
Too many people are needlessly losing or wasting thousands of pounds buying off plan properties. The ones that are succeeding are the ones that are astute enough to understand that buying off plan property as an investment needs as much research and due diligence as buying a second hand property.
Don't waste your money chasing profitless property deals. Carlton Johnson is a well respected author and webmaster specialising in helping investors make money in any type of property market. To learn more and to claim your free book titled "The Five Rules of Property Success" visit: http://www.investment-property-guru.com
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