How to get the biggest discount on the best off-plan property

How to get the biggest discount on the best off-plan property

Negotiating the best off-plan investment

As a property investor, you’ll learn to love numbers. After all, you don’t invest without wanting to make a profit. Once you’ve bought a buy-to-let property, you’ll be concerned with maintenance costs, investment property management fees, the mortgage interest payments, and, of course, maximising your profit from rental income.

Investing in the best off-plan property for sale is likely to keep your maintenance costs to a minimum. You should benefit from high demand from prospective tenants – people love to live in new, modern homes. Higher demand will help you achieve optimum rental value. The key to maximising your profit from off-plan property investment could be the size of the discount you get from the developer.

In this article, we’ll discuss how to maximise off-plan property discounts from the developer.

Understanding what the developer wants

The art of any successful negotiation is to understand what the opposite party wants. In the case of off-plan property sales, the developer wants to:

  • Cover their initial costs
  • Kickstart their project financing
  • Evidence investor confidence when negotiating further financing

The thing is this: the developer wants to sell. You want to buy. All you need to do is negotiate a price which is right for both of you. To do this, there are four key things to do:

1.      Buy off-plan property early

It is the number one rule of getting the best price on anoff-plan property: buy early.

Developers sell off-plan to help finance their development. Usually, they’ll have a strategy of staged off-plan sales: they sell a few units before breaking ground; a few after six months; then some more three months later; and so on and so forth.

At each stage, they’ll increase the price as they move nearer completion of the entire development. So, the earlier you buy, the cheaper the off-plan property will be.

At each stage, the developer will have a sales target to meet. It is the next important bargaining chip to get the best off-plan price.

2.      Buy off-plan property in bulk

When a developer sells one off-plan property at a time, the costs of selling are multiplied with each sale. It’s much better for the developer to sell in bulk. If they want to sell, say, ten units and you offer to buy all ten in one hit, that’s a great negotiating position.

Okay, so it’s unlikely that you’ll want to buy multiple properties in a single development. But institutional investors and property investment companies (like Gladfish) have the capability to do so. So, you can piggyback off such a market muscle by working with a company that will buy in bulk and pass on the bigger discount they’ve negotiated.

3.      Be prepared to move quickly

It takes time to put together an off-plan deal. The developer wants to sell its off-plan property as quickly as possible, so they can start the build and move towards completion. They want to move to the next stage. Time is money. So, the quicker you can move, the better it is for the developer.

If you have all your people lined up and ready to go, then you should be able to move quickly. Being able to complete the deal within, say, two weeks and not eight weeks could get you another couple of percent discount on the price.

4.      Buy off-plan property off-market

If a property developer needs to go to market with its off-plan property, its costs rise. They’ve got to market the property. That means producing brochures, conducting viewings, advertising in the press, and so on and so forth. All this adds costs and reduces profits. (Usually, it’s not the developer who does this. These sales are normally handled by sales agents.)

If the developer can sell without incurring these costs of selling, at least part of the saving can be negotiated as another clip of discount from the price.

How can you pocket all these bargaining chips?

In truth, it’s going to be difficult, perhaps impossible for an individual investor to get the best off-plan discounts from a developer. To do so, you’ve got to:

  • Buy early
  • Buy lots
  • Buy quickly
  • Buy before sales are made public

I don’t know of a single private investor who has the capability to do all four of these things. It’s no surprise, then, that the big institutions have always had the upper hand. I never thought it was fair that there was this two-tier market in off-plan property – one price for the big boys, and another for you.

Over the last twelve years, we’ve worked hard to build up our network of relationships with developers. We’ve got hundreds of investors on our client list. Investors who aren’t put off by short-term market weakness. Investors who, when they buy off-plan property, aren’t looking to flip at the first opportunity. Developers want this type of investor – it gives them certainty and solidity.

What we’re able to do is to negotiate early-stage bulk purchases from developers selling off-plan property. We’ve already conducted the research and due diligence to ensure that the development and developer’s properties are a viable investment proposition. And because of our network of professionals (solicitors, accountants, mortgage brokers), we can move super-fast.

We’ve got all the bargaining chips lined up. All you need do to benefit from (probably) the best the off-plan property discounts is contact one of our team today on +44 (0)207 923 6100.

Live with passion

Brett Alegre-Wood

About the Author

Brett has over 20 years experience in all facets of property, he owns various companies centred around property and is the driving force behind the education and training at Gladfish. His companies have sold over £850 million in UK and London property and he manages over 1200 properties through his estate agency chain. Today he shares his time between UK, Australia and Singapore. He is married to Arlene and together they have 4 kids.

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