For property investors, buying property off-plan offers distinct advantages.
The biggest being the opportunity to purchase property at a lower than
market value price as well as being able to capture the best units in each
development, as these are often released first (i.e. penthouses and garden
facing units). By buying early in a development, once the build is completed
your investment is likely to have gained months or years of capital growth
depending on the stage of development when purchased, with the added bonus
of not having to fully purchase the unit until completion.
If you are
new to this marketplace the question you will be asking is why do developers
sell off-plan property at discount? The answer is simple, developers are
keen to sell as many properties as early as possible to minimise the risk to
themselves and to obtain better interest rates on their development loans
from banks and investors.
As
investors you will be able to track the growth in your property with prices
typically increasing as the
development
progresses - making the gained equity value apparent. Then, once you have
exchanged contracts, usually already with a discount negotiated by us, the
developers are able to lock in the capital growth for the entire build time.
Once the property is built, you the investor still retain the option to
complete the purchase, and benefit from a rental income, or sell and realise
the capital growth that has been achieved throughout the build but do have a
look at our FAQ page for information on how easy it
may or may not be to sell on or about completion.
Either
way, this often provides a very good way for investors to start their
portfolio, as they do not have to worry about tenants, refurbishments,
rental collection or mortgage and insurance payments.
Due to the
buoyant nature recently in the property market, even with its supposed
levelling out, off- plan purchasers have still been making a shrewd
investment because of the initial saving and the steady price increase over
the build duration.
For
example, you purchase an off-plan property, with an anticipated build time
of 24 months for an “open market” price of £100,000. We will have negotiated
a 15% (£15,000) discount off this price; therefore you would only pay
£85,000 (plus a finder fee). If property's price increases by an average of
10% per year over the 24 month build time, the market price, upon
completion, would be in excess of £120,000 and with built-in equity of over
£35,000.
You
usually have to pay just 5% deposit
(but see
below)
on exchange of contracts plus the finder fee, on the example above this
means £4,250 deposit and a fee (including VAT) of £1,997 – a total outlay of
just £6,247. At the point of completion you would now be in profit to the
tune of just under £30,000. You can remortgage now to release some of that
equity and buy another property, or you can sell the property on at a profit
– as always the choice is yours and will depend on your
personal plans.
James Green & Co can now
offer
NO DEPOSIT
deals on selected
properties.
Please click here to get further information.
There has
never been a better time to invest in property. By buying off-plan you can
easily make instant profits.
