What Is Off-Plan Property and How Does It Work?Property Investment Basics
Off-plan property is a term that you’ll see a lot on our website, but it can be unclear what this term means.
Simply put, investing in off-plan property means buying a property that is still in the planning or construction phases. This means you will be waiting for it to be completed and ready for tenants before you can start earning rental income from it.
This is different to traditional buy-to-let investing, where you buy an already-complete property and can start collecting rental income as soon as it is tenanted.
More About Off-Plan
Off-plan has several benefits compared to traditional buy-to-let which is helping it to gain popularity in the property investment industry.
For starters, off-plan properties are usually sold for below-market-value prices due to their still being under construction. This means investors can secure highly competitive and luxurious properties for far cheaper than they could otherwise.
Because off-plan properties are still in development, investors can choose to secure their pick of units in the project. Often, this allows them to secure units with the best views which will help allow investors to charge higher levels of rent.
Investors can cherry-pick their chosen units in the development, which is a luxury not usually available to investors.
Off-plan properties are also new-build developments, which are usually located in inner-city locations and regeneration hotspots that are popular with younger tenants, meaning they will be in high demand once ready for construction.
To invest in off-plan property, investors place down a deposit to secure their chosen units in the off-plan development and pay a reservation fee. They will then be required to pay portions of the price at different stages in the property’s development.
This allows investors to spread out the cost of investing over time, which for many means they won’t have to borrow a buy-to-let mortgage, which only adds to the cost of investing.
Investors will receive regular updates about activity and progress with the construction of the development, while eventually being able to visit the site in person to see how their property is looking for themselves.
The major downside of off-plan property investment is that you have to wait until the development is complete before you can fill your property with tenants and begin earning returns from it.
This can be a long wait, especially if the development runs into problems. It is common for investors to have to wait for years before they can start earning returns on their off-plan buy-to-let property.
However, by investing in off-plan property with RWInvest, you can be assured of consistent and detailed construction updates, as well as persistent client care throughout every step of the road when buying off-plan properties.
This way, we help keep investors relaxed and patient while waiting for their investment properties to be ready, while getting all the benefits of off-plan property investment.