When investing in property, there are typically two key objectives to consider – high rental returns and capital growth – both of which can be achieved when purchasing an Off-Plan property.
Buying Off-Plan property has a slightly different initial process to buying pre-tenanted or pre-built Buy-to-Let properties but comes with its own unique advantages and benefits.
Off-Plan Property Investment Explained
Investors or home buyers typically purchase Off-Plan property during the construction part of the building process. It’s usually purchased at a discounted price to the actual value of the completed state making it attractive to property investors.
Generally, the investor will need to pay a reservation fee and a deposit. The deposit can be anything from 10-20% and upwards of 30% depending on the developer and development. This is an attractive prospect to investors alike due to the high leverage of the deposit during the build period.
Potential for Strong Capital Growth
A key incentive for investing Off-Plan is the potential for attaining capital growth as the property grows in value over the build period. If it has been purchased at a discounted price from the beginning, this can mean exceptional growth before the property even completes. With this in mind, some investors choose to immediately put their property up for sale to make a profit. While this short-term strategy is ideal for investors looking to see returns quickly, investors will see much more capital appreciation by tenanting the property over a long-term period – gaining the benefit of regular rental income in addition to increased value.