Investing in off-plan property can be an exciting way to grow your portfolio and there are plenty of benefits to this approach. But it’s important to do your research before you jump in. The market is constantly evolving and with so many developments out there, it’s important to know what to look for before making a purchase.
This article contains five key tips to help you focus on finding the best off-plan property, so you can be super-confident in your investment choice. But remember, you should always speak to a professional if you are unsure of any aspect of your purchase.
Tip 1: Location
Location is key to investment success. That’s because location determines the value that your property will hold in the future. So, it’s essential to look for properties in areas where there are strong transport links and local amenities. This is especially important when it comes to off-plan properties, as you’ll want your homes to be within reach of shops and services so that your tenants can easily get what they need from them.
You should also make sure that the location of your property has good transport links so that people can easily commute from it to work or school. It is also a good idea if there are nearby shops, restaurants, schools and universities so residents don’t have far to travel when they need something urgently or want some entertainment after work
Tip 2: Cash Flow and Capital Growth
The first thing to do is figure out how much rent you can expect to get, and how much it will increase over time. You need to have a clear idea of what the future cash flow is going to be in order to know whether your investment is going to be profitable.
Once you have this information, it’s time for number two: capital growth. Capital growth occurs when property prices rise over time, which means that if your property has increased in value, then this will also increase the amount of money you can earn from it when tenants move out or sell their properties later down the road.
Tip 3: Yields
When investing in off-plan property, yields are key. Yields are the annual return you get on your investment. They’re calculated by dividing the annual rent by the purchase price.
Yields should be higher than other investments because of the risk involved with off-plan properties. You’re not going to get this with shares or bonds – those have low yields, which means that there’s less chance of losing money when you invest in those types of assets.
Tip 4: Developer Reputation
It’s also important to research the developer. You’ll want to look at their track record and see if they have a good reputation for quality, delivery and customer service. Look into previous projects they’ve completed and what feedback their customers gave about those projects.
You can also check out sites like Houzz or Pinterest where users share photos of homes that are up for sale.
Tip 5: Quality of the Development
The quality of the development is important to consider when investing off-plan, particularly if you’re looking at a new project. Here are some questions you should ask:
- What is the quality of the development?
- Is it a reputable developer?
- How are they designing and constructing their buildings?
- Are there any amenities included in the price, or are they additional costs?
- Will your property be completed on time and within budget?
Bonus Tip: Know What You’re Looking for Before You Start
The biggest mistake investors make is to not do their homework and research the property, market and developer.
They should know what they want from a property before they start looking at it.
As an investor, you need to have a clear vision of what you’re trying to achieve with your investment so that when you find it, you can determine if it fits into your strategy or not. You also need to be prepared for any risks which may arise before committing yourself to buying off-plan – this way, if things don’t go as planned then at least there will still be time for other options (e.g. renegotiating with the builder or selling on).
The key takeaway from our tips is that you need to do your homework before investing in off-plan property. This includes understanding the market and the developer, as well as knowing what kind of returns you expect to see on your investment. You also need to consider things like location, yield potential, and cash flow. When you’ve done all this work, then you’ll be ready to invest wisely!
If you need any help with the property investment process, feel free to contact our team. We’re a specialist advisory company, we help clients find suitable properties across the UK and Dubai, with no fees or hidden costs.