What are the best tips to profit from off-plan property investment?

How do savvy investors maximise their off-plan profits?

When you invest in off-plan property, you are buying an asset that hasn’t yet been built. All you have to go on when making your decision is the plans that the developer gives you. Of course, depending on the stage of development, construction may have begun; but there could still be some time before completion.

Developers sell off-plan property to kick-start a development. It’s a good way to access early funding and shows finance companies that there is investor confidence in the development. Off-plan investors receive several benefits when they purchase the property from the developer. It’s a proven strategy for profiting from new build property in the UK. For example, you could get a very sizeable benefit from the current market value. However, before you rush to invest in the hotspots for off-plan property investors, follow these four tips to make sure you invest wisely:

1.      Research location

Consider the local economy. What have the economic trends been, and is there any major investment planned? Examine how the property has performed in the area and the factors that will drive demand in the future. Regeneration projects will help to underpin the value of your investment. You should invest where the property fundamentals are strong. Think ‘shops, schools, transport links, major employers and major investment’, and ensure that all these elements are present where you invest.

2.      Research the developer

Never buy from a first-time developer. You should only consider investing in a development constructed by a reputable developer. Consider the track record of the developer, and whether they have delivered similar projects on time. Ask for references and testimonials, and take all the precautions to slash developer risk when you invest in off-plan property.

3.      Make sure the numbers add up

Whatever property you buy, you should undertake a conservative cash flow projection. Speak to local agents and discover how much rental income you could expect to receive. Make sure that you have the right figure for any service charges, and include an allowance for maintenance costs (even though these should be minimal on new build properties).

The secret when working out your cash flow is to:

  • Include every single cost that might apply
  • Be conservative with your projection – overestimate costs and underestimate income

 

Do these two things, and you’ll discover if the investment makes financial sense or not. Whatever you do, don’t be tempted to make the numbers fit simply because you ‘think’ the property will provide decent returns. Remember, an investment property is a box that makes money: there is no room for emotions when you invest.

4.      Work with experienced professionals

Finally, don’t go it alone:

  • Take advice from experienced property experts
  • Make sure you get the best advice when searching for buy-to-let mortgages – a good mortgage broker will make sure you get the best rate and mortgage conditions for your investment
  • Hire an accountant who understands property investment – they will help to minimise tax and maximise profit
  • Use a solicitor who is experienced with off-plan contracts – the process is more difficult than conveyancing on the purchase of your home

Follow the KISS principle

Though off-plan property investment is more complex than some other property investments, it is only as difficult as you make it. Perhaps the most important thing to remember is not to forget! Don’t forget deadlines that are approaching. Don’t forget the need for paperwork to be processed. Don’t forget to get your finances and financing in order. Don’t forget you get the picture.

Here at Gladfish, we source off-plan properties from the most reputable developers, and in locations that our Hotspots algorithm has identified as an up-and-coming property hotspot. Investors then benefit from a dedicated property consultant and a highly experienced sales progression team, which liaises between all parties and ensures the investment process is as hassle free as possible. It’s the ideal way to follow the KISS principle – ‘Keep It Simple, Stupid’.

To discuss your financial objectives and receive a personal evaluation of the benefits of off-plan property investment, contact one of our team today on +44 (0)207 923 6100. We’re here to help you make a profitable and hassle-free property investment that allows you to sit back, relax, and enjoy the rewards of your investment.

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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