5 Tips For Off-Plan Property
Liam Smith, Senior Investment Consultant at SevenCapital, shares these five top tips you should consider before any Off-Plan property investment.
What are the 5 Tips for Off-Plan Property?
Know Your Objective
First of all, you need to know why you want to invest, how much you want to invest and when you want to invest, these are your objectives. Most clients are investing for different reasons; some clients are looking to provide a passive income or create a pension fund while some have more short-term goals. Whilst we recommend mid to long-term investments, the Off-Plan opportunity can create a very good short-term investment opportunity.
Once you’ve decided on which direction you want to go in, you need to start researching your. Researching areas and markets that you’re looking to invest in is exceptionally important. If you’re looking for high capital growth and strong rental yields then places like Birmingham are currently outperforming London, with massive infrastructure change like HS2 and the Midland Metro attracting massive businesses such as HSBC, bringing a huge wave of young professionals into the city. That, with graduate retention from the five universities, creates a huge demand for property in the city suburbs. This will create great capital growth and brilliant rental yields.
The most important thing is knowing your developer and having the trust in the project. Buying Off-Plan is not a natural process and it won’t feel comfortable, so going to meet the agent or the developer on site or looking at one of their previous developments should fill you with the confidence that you need to invest. I feel that this is one of the most important parts of the process. Any reputable developer agent will be able to make you feel comfortable from the start, answering any questions that you have about the process, the development, the special purpose vehicle behind the investment etc. Once you’ve done this you can then go on to the next step.
At this point you must have the confidence in everything you’ve done so far, this is the stage that most investors or clients that have never invested before will back out and they do come to regret it. If you’ve done your due diligence, your research and you’ve met the developer, you should have the confidence in proceeding and make that reservation
Remember to keep up the due diligence during every stage of the process. Once a reservation has been made, it’s your legal representative’s job to check out the contracts, the lease, and the special purpose vehicle behind the investment. Once they’ve got to a point where they can exchange, they will allow you to transfer funds to the next stage of the investment. The next part of the process is the build period. Any respectable developer will be able to provide you with constant build updates, sending you photos and potentially some videos. During the final stages of the investment, the company should offer you advice with regards to mortgages, furnishings and most importantly, the lettings process.