If you want to buy an off plan property, there are many off plan property investment mistakes that’ll affect your chances of getting the right real estate property.
Knowing the common off plan mistakes means, you’ll make fewer mistakes yourself.
There are many things to consider when buying off plan property, from what you see on the website or brochure to construction delays and a weak market.
You need a plan of action to mitigate the risks and make the right decision.
Wouldn’t it be helpful if there was a guide that showed you what not to do when buying off plan properties?
According to Cambridge, they describe an off-plan as: If you buy a house, apartment, etc. off-plan, you buy it before it is built, when only the plans for it exist.
If you’re considering investing in any off-plan properties, then this is an extremely important post for you to read.
In this post, we go through all the mistakes real estate buyers make when buying off-plan property and show you how to avoid them. It’s never too late to learn from others’ mistakes!
Not Planning Enough Before Buying Off Plan Property
Planning is the key to success, and we should not take it for granted. Why? Off plan property purchase can bring many uncertainties and risks to you.
So, how do we plan better for our off plan property purchase? Here are some steps that you should take:
1) Choose a location that has potential for future development – this will help you not only secure your real estate investment but also enjoy increased yields as demand grows in the future.
2) Choose a developer that has a good reputation and has delivered on their promises in the past. This ensures your off-plan property purchase is backed by experience and expertise.
3) Choose a reputable real estate agent like Priment Realty who will be able to provide you with all the information and support needed to make an informed decision about your purchase.
Ignoring Paperwork When Paying For Investing In Off Plan Properties
It is essential to get an off plan property purchase contract checked before signing any deals.
If not, the buyer will be accepting all risks of uncertainty, so it is best to get legal advice before buying off plan property.
Off-plan property purchase contracts are legally binding contracts that should be scrutinized before signing any deals.
If not, the buyer may be accepting all risks of uncertainty, and that could prove costly in the future.
It is therefore imperative to seek legal advice prior to buying an off plan property!
Not Checking Your Budget Before Investing In Off Plan Property
Budgeting for off plan property can be tricky, as you don’t know the exact price of the property that you will eventually buy at the end of the development – except it’s stated.
You also don’t know if the final development will be delivered or how many properties it will contain. You want to consider all these factors before making an investment decision.
However, there are some points that buyers should be aware of before investing in off plan property.
For example, it is not uncommon for buyers to invest their money into an off-plan property without checking their budget first.
This can often lead to financial troubles due to unrealistic expectations on pricing and mortgage terms.
The buyer’s budget should be checked thoroughly before any significant investments are made so that there will
Not Seeking Professional Advice When Considering Investing In Off Plan Property
Investors could be making the mistake of not seeking professional advice when investing in off-plan property.
It found that one in five investors are currently considering buying off-plan property, but are worried about getting poor value for money.
The findings suggested that many people are worried about the high risk involved with this type of investment because they do not know what they should be looking out for.
The research also found that not seeking professional advice is having a negative impact on a potential buyer’s decision-making process, as it could mean that they end up paying more than other buyers or may end up regretting their choice too late.
Before investing in off-plan projects, it’s important to know the risks involved and the potential return on your real estate investment.
You also need to know what kind of project you are considering investing in, how much money you want to invest, what are your expectations for returns?
For instance, if you’re investing in an off-plan property in Lagos, you should know the risks involved and consult with a real estate investment company in lagos first.
Missing Out On Vital Research That Can Help You Choose The Right Off Plan Property
An important part of the planning stage, research is key to choosing the right location, type and term for your off-plan property investment.
Before you invest in an off plan property, research the project thoroughly to find out what you’re getting into.
We have created a list of 6 things you should consider before purchasing an off plan property.
1) How much are the deposits?
2) How far is the completion date?
3) What is the rental potential of this property?
4) What is the resale value of this property?
5) How good are the construction reports and reviews on this project?
6) How do I go about cancelling my reservation with this developer?
Don’t Let Emotion Rule When Investing In Off Plan Property
Base your property investment decisions on data, and you won’t go far wrong.
Look at the gains and turns.
Emotional decision-making is one of the most common reasons for people to purchase things they don’t need.
Before making an off-plan purchase, consider the following:
-Do you really need it?
-Do you need it right now?
-Is it worth taking on new debt?
Don’t let your emotions rule you when making a purchase.
Ask yourself if you can afford it and where will this money go.
Investing in off-plan property purchases should not be taken lightly, as they have a significant impact on your finances.
When joining an off-plan property scheme, buyers need to assess whether the purchase is feasible for them financially and whether they have the funds to cover the initial deposit cost.
Not Having The Confidence to Go Through With Your Off Plan Investment
It can be a nervous time, but if you have the confidence to make your reservation, you’re less likely to miss out on something you could regret.
However, if you feel it’s hot right or wants something better, you think about it – but not for too long.
When it’s time to sign on the dotted line after your research.
Just do it.
Skipping Key Due Diligence Duties When Buying Off Plan Projects
A large majority of the mistakes that have been mentioned here can be solved with good due diligence.
Due diligence is the process of investigating a potential property or investment to determine its worth. It can be applied to both new and existing properties.
Investors should be aware of the risks involved with off-plan properties before they make any commitments.
The following are key due diligence duties on off plan property:
– The value of the property has not yet been determined,
– Prices, specifications, and other information may change without notice,
-There is always an element of risk with any type of property purchase.
However, with our service, you can reduce this risk substantially by leveraging the expertise and transparency provided by the Priment Realty team
Tip: Land registries, which have records of the title to real estate assets, are usually the best places to conduct title searches.
Not Having A Clear Goal Is One Of The Most Common Off Plan Property Investment Mistakes People Make
There are different things you can do with your off-plan property, like…
Residence: Acquiring a property for residence helps you save on rent, while also enjoying capital value appreciation.
Lease: If you are keen on creating cash flow, acquiring a property for lease is your best bet.
Whether you decide to use the property for a short lease or an annual lease, you can still be guaranteed some cash flow.
Holding for the short-term: This option is perfect for investors who do not intend to hold for more than 5 years.
Ideally, we recommend that investors in this category subscribe to off-plan properties and hold for a period of 5 years before selling.
Consequently, investors can expect to make 100% return on capital invested – depending on the choice of property. (Click here to see recommended off-plan properties)
Holding for the long-term: This is generally focused on intrinsic value appreciation over a long period.
It is also worth noting that this option is a perfect fit for long-term goals, such as retirement.
Choosing A Bad Choice Of Location For The Off Plan Investment
Location is one of the most important factors that influence the price and type of property.
Choosing a location for your property may seem like an easy task, but it is highly important as it can affect the price and type of property.
Some factors to consider when choosing a location include:
– proximity to public transport routes
– noise level
– crime rate
– access to amenities such as shops, schools and hospitals
Rushing To Pay Off Plan Deposit Without Checking The Company’s Reputation
Be aware of how important it is to research the company’s reputation before making a payment.
If you do not, you may end up having access to all our sensitive data stolen and getting scammed in the process.
You should thoroughly research the company’s credibility before making a deposit or transferring any money to them.
You should also verify their authenticity by checking out their social media accounts, reading reviews about them, signing up for their newsletter, and even calling them up to ask about their services.
Not Visiting The Seller´s Other Off Plan Projects.
As with any investment, there are risks involved with buying off-plan properties, so it’s important to think about how this fits into your life goals.
Secure an investment agreement that ensures you have protection against cancellation.
Also, consider whether you have enough funds available in case of any unexpected expenditure.
If you have found an off-plan development that meets these requirements, then it’s worth considering visiting the seller’s other promotions before making your decision on whether to buy that particular one.
Being Pressured By The Off Plan Vendor.
Developers and builders are so eager to sell their properties, they often pressure buyers with advertisements and discounts.
These red flags will result in an oversupply of the same product, so buyers should be careful when looking for a new property.
Buyers must be on guard for these tactics because an oversupply of properties is leading to lower demand.
Developers and builders are trying to recoup their investments by pushing more units on the market, which devalues both houses and investment properties in that area.
Not Looking For A Specific Delivery Date & Deliverables In The Off Plan Contract.
Off-plan developments can turn into a nightmare if not planned too far in advance.
With the contract, the developer and homeowner agree on what is included in the development and when it will be completed.
This agreement should include a date for when the developer expects to complete the building and hand over the property.
Also, a list of things that’ll be included in the off-plan property.
Avoiding these contractual obligations leaves both parties in limbo and unsure of their obligations, which can lead to costly court proceedings and delays.
It’s important that developers provide homeowners with a realistic timeframe for completion of their homes, so they can make decisions about how long they need to keep their current home.
Signing Off Plan Contract You Don’t Understand.
We’ve all heard the horror stories of people buying off-plan properties in Spain, Greece, Croatia and elsewhere.
They put down a deposit and secure themselves a property before construction has started.
The developer goes bankrupt, the development is never completed, and they are left with nothing but an empty plot of land.
Do not sign any contract you don’t understand. If you can’t understand it, then it’s not worth signing on the dotted line.
Before signing a contract, it is important that you understand the terms and conditions and if you feel like you don’t understand them, ask for clarification or seek legal advice before proceeding with your purchase.
Missing Payment For Your Off-Plan Property Without Communicating With The Vendors
Investors may not have the means to pay for the property in full at the time of purchase, and even if they do, they will not be able to secure a mortgage.
Off-plan properties are often sold on a ‘sale and leaseback’ basis, which means that it is possible for the buyer to agree to buy the whole property from the developer as long as they can afford it.
However, if the seller decides not to sell their share of equity, then there is nothing that can be done about it.
In order for an investor to ensure that they do not miss any payments on their off-plan properties, they should ensure that there is at least 25% equity available before signing a contract with a developer.
Not Getting the Off Plan Builder’s Guarantee For Defects
Buying off-plan could be a good investment if the builder is reliable.
There are several factors to take into account when buying an off-plan property, but the most important one is to make sure that the builder has a good reputation.
You can request to have your future property inspected before it is completed by the builders.
This could ensure that there are no defects along the way, and you can also request a builder’s guarantee for defects before signing any contracts.
Find Out If You Can Transfer Your Interest in the Property
When you buy off-plan, you are not guaranteed the same rights as someone who buys a property on the open market.
It is important to know what these rights are before purchasing an off-plan property.
Investors who buy off-plan properties may not be aware that there are different sets of rules for buying and selling these properties.
The seller has to honour any assurances they have made about the development, such as its location, specification and finishings.
This means they cannot sell it to another buyer with any changes or withdraw it from sale without giving buyers written notice first.
Trying To Buy The Off Plan Property Without The Right Knowledge
Buying off-plan property is a risky and challenging process.
The buyer is expected to understand the risks and potential benefits.
It can be challenging to get accurate information about the project and the investment, which leads to misinformation and confusion about what is worth investing in.
It’s advised to hire professionals for this process, especially when buying an off-plan property in an emerging market.
Professionals are equipped with knowledge of how these markets operate, they are able to understand when there are risks involved in buying off plan property.
They will know when it’s worth investing in projects that have the potential for profit or in projects that offer more affordable prices.
Investors should tap into all possible resources and connect with experts who can help them make the right purchase.
A list of potential experts should, at the very least, include a knowledgeable realtor like Priment Realty & a good lawyer.
Any flaws in the home or neighbourhood should be identified by these experts.
Or, if you hire a lawyer, he or she may be able to alert you to any title defects or irregularities that could come back to haunt you down the line.
Overpaying For A Off Plan Property
If you are planning to buy off-plan property, you should always get professional advice before committing.
If you are buying in Lagos, it is even more important than usual.
There are many scam methods that criminals use to rip people off who buy properties.
There are many ways that sellers will try to deceive buyers, so they can get away with overcharging for the property.
Some will offer lower down payments than the asking price because they know it’s hard for buyers to say no when they think they’re getting a bargain.
It is important for buyers to make sure that they are financially stable before buying off-plan property.
You should make sure that you have enough savings or disposable income which can be tapped into if needed, without any adverse effects.
Not Verifying The Off Plan Building Plans
When someone buys a property, they need to know all the specific details of the property.
The buyer should not rely on what is shown in advertisements.
Buyers should always review the building plans of their property before purchasing.
Companies that offer off-plan properties will provide detailed layouts and specifications, but it’s worth getting an independent surveyor to check these documents for accuracy and completeness.
These might look like extra steps, but it’s worth it.
Investing in real estate can be tough.
It’s not something everyone can do. Luckily, there are some things you can do to make the process less painful and effortless.
Check against these mistakes we’ve identified, and things should go much smoother.
If you want to reduce these mistakes to zero, contact us, let’s help you with the real estate investment process.