When investing in property, there are already a lot of factors to consider, let alone the concern of your property not being built. A purchase preceding the finished construction of the property, done in planning stages, off-plan investment differs to that of a typical one, in that there is no tangible development that you can view and inspect before purchase. However, despite concern, off-plan is actually very popular in flourishing areas where the demand is exceeding the speed of production, and It can be a very exciting prospect.
With that in mind, here are three key reasons why off-plan investment can prove beneficial to a potential investor.
One significant benefit to buying off-plan is the fact that it is an excellent way to prepare for the future of a city. Competitors will not wait for a building to be completed, and the chances are, it will also be more expensive when completed. London-based investors looking to expand their portfolio in the Midlands and North increased by 4% in 2010, then 14% in 2015, and a massive 34% in 2018. As the zeitgeist turns in favour of the North, off-plan can prove a good way to get ahead of the pack.
Additionally, one crucial thing to remember about investing in the thriving northern markets is the large potential for capital appreciation. As buyers claim space in areas where residencies are planned for the future, their value can increase. This means that even before the doors of the property have opened to the tenant, it can start generating revenue.
With the media outcry for the ‘Power Up the North’ scheme – narrowing the divide on public spending between the north/south, the amount of investment opportunity is surely set to increase, and much of it will be off-plan, giving investors the opportunity to engrain themselves in a city and community for the long-term.
With the tools and technology that property companies and developers have at their disposal, it is now easier than it ever has been before to get a concise, accurate representation of what your investment will look like once completed.
Property investment company RW Invest offer reassurance on off-plan investment through multiple avenues of communication. Aside from being the highest rated property investment company on Google and Trust Pilot, they offer comprehensive update packages on each residence as it is being built, and also provide state-of-the-art Virtual Reality tours to help you visualise your purchase.
For international investors, virtual reality technology (alongside detailed blueprints and CGI images) can be invaluable if it is difficult to visit the area in person.
As an incentive for investors, many off-plan properties are offered at discounted rates initially, and so if you feel the extensive previews (again aided by technology) are enough to go on, off-plan can prove to be a great way of being ahead of the curve. Additionally, many companies offer payment plans for investors that go hand-in-hand with development, allowing you to spread the cost by paying an initial deposit and then additional instalment when development milestones are met.
To ensure you increase your chances of growth over time and bolster any financial gains, do your research on the area you’re considering investing in. For example, as the housing market trends shift away from the south in favour of ‘northern powerhouse' cities such as Leeds, Liverpool and Manchester, their investment possibilities also follow suit. House prices in the north-west are set to increase by 21.6% by 2023, the highest of any other area, with London following sluggishly behind with only 4.5%.
Top-Tip: Still concerned about the schedule and production pipeline of your potential investment? Take a look at some past projects from the developer working on your residence, as it will give you a better idea of their reputation, communication with the buyer and how long it will take before tenants can move in. Remember: if you’ve invested in a growing area, your pre-purchase property may still be ticking away in the background in terms of capital appreciation.
Tarik Pierce is the founder of InvestorTrip.com and regularly contributes articles to this website.
While living overseas, he uses PureVPN for a low cost VPN service.
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While his background is mostly related to trading stocks, he recently gained interest in real estate crowdfunding with Fundrise.