So, your family feels as though you have your own home mortgage well under control, have topped up your RRSP’s, and are looking for something a little more adventurous for your next investment endeavor.
While many families choose to invest in rental properties as a means of long term saving, have you considered Off-plan property?
Off-plan property (or pre-sales property) is typically purchased while in the construction stage and has become a popular venture for developers across North America and even the UK, where housing is especially in short supply.
If you’re looking to take your family investments to the next level, you may want to take a look at the pros and cons of and decide if off-plan is right for you.
One of the main reasons why investors choose to purchase off-plan property is due to the discount benefits. Many developers and investment companies offer lower purchase prices for off-plan property, as well as deposit deductions, which could start from as little as 5%. This is ideal for anyone who has a lower-end budget, as you can also spread the costs throughout the development period, which will result in less financial strain.
Similar to pre-built investments, you can take advantage of property appreciation. However, with off-plan properties, the value of the property should appreciate before you even get the keys. This will ensure that you receive great returns on top of rental income, which will offer you a significant return on your investment.
When expanding your portfolio, it is important to choose different types of properties to reduce risk. This is where off-plan property comes in handy, as it offers you a diverse option that you can fall back on if any of your other investments experience a slump in the market.
One thing that puts investors off buying off-plan is the fact that you can’t physically see the property before it is built. While this is a risk, there are actually various ways you can see your property without taking an actual tour. For example, property investors like RW Invest utilise high-quality virtual reality technology for their off-plan property. This offers a realistic look into what the finished product will look like, which should definitely reassure you.
When choosing to invest in off-plan property, you must be patient. You may have been given a completion date, but this could easily change. A delay could occur due to several factors, such as lack of materials, funding, and more. Although this may be an inconvenience, you will want the property to be perfect, so waiting a while longer will ensure that your investment is high-quality.
If you plan to invest with a buy-to-let mortgage, you need to make sure that your agreement is longer than the usual period of six months. While some lenders are hesitant to offer mortgages for off-plan properties, there are actually plenty others out there who will. You should also ensure that no massive changes are made to the property, as this could affect the size of your mortgage. This can be avoided by maintaining contact with the developer to ensure you’re getting the property you agreed on.