Four steps to maximise your off-plan property returns
Off-plan property investors tend to fall into two categories. Most buy an off-plan property and then benefit from the capital growth and rental income it produces for years. A smaller number sell their contract before completion or sell the property shortly after, to pocket the capital gain the property has made.
In this article, you’ll discover:
- Why Gladfish has such a good reputation with investors
- Why off-plan property is cheaper than new build property
- How to maximise your profits when investing in off-plan property
How does Gladfish help investors in off-plan property?
When you work with us to invest in off-plan property, there are a number of benefits you’ll receive. These include the opportunity to buy off-plan property at the best discounts – we’ll look at how this works in a moment. First, let’s look at what else we do:
Education, research and guidance
In addition to our market-leading discounts, you have free access to an incredible investment education resource. In the Gladfish Academy, you’ll find articles, webinars, investment books and guides, videos and other materials that cover all the basics and beyond. Comprehensive content covers all aspects of property investment, including:
- Pension and retirement
- Economics and politics
- Lettings and rentals
- Property taxes
- Education and information for beginners, professional investors, and overseas investors
- Investment strategies and different property types
- And so on
You also have access to our residential investment property research. Our unique Hotspots Algorithm researches 108 data points across 324 UK areas – before you invest, you can be sure that you are buying in the best places to invest in property UK.
We don’t simply source the best property for you and leave you to get on with it. We’ll guide you every step of the way, with a sales progression process that keeps your investment on track with as little effort as possible.
Our complete offering, free-to-access resources, and attention to the business of property investment has been proven as a winning formula for hundreds of property investors.
Why is off-plan property cheaper than new build?
In addition to researching the best locations for property investment, we also ensure that we only work with developers who have the best reputations for delivery of off-plan units. These developers want to raise money to help fund the development. Rather than approach banks or other lenders and pay high-interest rates, they sell property off-plan to investors.
At this stage there is no property to sell, only the plans of building. These units are sold at a discount to market value – and the market value is calculated on the date you agree to purchase, not on the date the unit is completed.
You’ll also benefit from staged payments. Typically, you pay a deposit of around 10% and the final payment isn’t made until completion, which may be two years or more later.
In a rising market, not only do you benefit from the discount on the day you buy, but also the increase in value between agreement and completion. The profit could be substantial.
Maximising off-plan property profits
When you understand how off-plan property prices rise through to completion, you’ll understand how to maximise investment profits. There are four things to bear in mind when investing in off-plan property:
1. The early buyer makes the best profit
The earlier you invest, the more profit you are likely to make. First, if the market rises you have extra time on your side. Let’s say that market values are increasing at 10% per year, and you buy a unit valued at £120,000 for £100,000. The development is due to complete in three years.
Upon completion, you will own a property valued at £159,720. Your profit will be £59,720. If you had waited a year before committing, the price you would have paid (assuming the same discount was available) would have been £110,000, and your profit £10,000 less.
The best time to buy is as early as possible, and preferably off-market – which is before the developer makes any units available to the public.
2. The best units are sold quickly and appreciate the most
When you buy early, you’ll have a better selection of properties from which to select. The best units always give the best investment performance.
3. As the development reaches maturity, discounts are reduced
As the developer builds out the site, the site will benefit from a show home, and completed units coming on line. More units are sold to willing buyers. The developer’s profit rises, and lenders are more inclined to loan money at more preferable rates. Even if the property market hasn’t risen, the developer will not need to offer such high discounts as previously.
4. Always do due diligence
Before you invest, always do your due diligence. Make sure the location is right, and that there will be demand for the property once it is built and the development is completed. Work through your cash flow projections, and ensure that the numbers stack up.
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