Tips to make sure buying off-plan is profitable
Although some investors buy off-plan apartments with a view to flipping them and making a capital gain, others buy new build flats to rent. There’s a lot of mileage in you doing so as part of a core property investment strategy. The question is when you’re buying off-plan, how do you buy new build flats to rent and make sure they will?
This post will show you the three things you need to do to guarantee a demand to rent your property after completion.
1. Know the area
The first thing to do is to know the area. Do your property research and make sure that you’re investing with property fundamentals in place. You should expect to see all the essential amenities – schools, transport, shops and so on – but you’ll also be searching to make sure that there are infrastructure projects planned and paid for.
We can already see a Crossrail 2 property investment ripple. The areas close to Crossrail Two stations are going to be in demand, particularly for the millennial generation, who are more mobile and more demanding than previous generations. They want easy transport options to work, and the benefit of a social culture near their homes – restaurants, cafés and bars are part of their social scene.
2. Know the development
Having decided that the location is a winner, next look deep into the development itself. Ask yourself if the developer has a good track record of building new build flats for buy-to-let property investment. Have they delivered timely and quality projects in the past? Do they produce award-winning developments that are in high demand?
You’ll want to invest in a development that is near the amenities that are important to your target market, such as schools for families, sports facilities, leisure amenities, retail and restaurants. The experience of Crossrail has shown us that developments within a 15-minute walk of a new Crossrail station are the ones in demand by tenants. Further away than this and the attraction of reduced travel times wanes.
Think about the development itself, and what extra facilities it offers over and above the homes being sold. A multi-gym sounds pretty good, but is it what families will want? Green spaces and children’s play areas look great, but will they attract young professionals?
Ask about other people buying off-plan. Are they homeowners or investors? Too many investors might mean the competition to rent out reduces rental prices. Too few could be an indication that there is not a very high demand for rental properties.
3. Know your tenant
This brings me to the final part of the equation, though it could also be the first thing you should understand: who is the target tenant?
It isn’t good enough to want to provide a home for young, upwardly mobile, dual income couples. You have to know that the market exists. This is where more legwork is required as you delve deep into the area you’re prospecting.
For example, if the location is mainly family-oriented, with good schools, children’s parks, and a high proportion of families living there, you will probably find the demand for one-bedroom flats to be extremely limited.
When buying off-plan, always do your research and due diligence
Whenever we offer properties to our clients, it’s because we’ve done the hard work. We’ve conducted in-depth area research. We’ve delved deep to ensure the viability of the development as a long-term, rent-producing opportunity. And follow our due diligence process.
This is the in-depth research that lets investors sleep easy at night, and that allows us to guarantee that a new build flat purchased through us will rent within six weeks of coming onto the market. We haven’t once gone back on that promise.
Get in touch with Gladfish today on +44 (0)207 923 6100 and find out what makes our due diligence process so exceptional.
Cheers,
David Lines
