• Sunday, December 03, 2023
businessday logo


6 things to consider before investing in off-plan property

Lifeline for renters as rent now, pay later solution hits market

Though it is no longer as popular as it used to be for reasons bordering on bad economy, off-plan is still a way by which many people approach property acquisition for either investment or residential purposes.

Off-plan is a type of real estate investment that involves purchasing a property before it is built. It means buying a property from the plan or draught without seeing the physical structure. It is an act of faith which, in Biblical parlance, is the substance of what is hoped for.

Among other things, off-plan allows people to purchase properties at a lower price than what the properties would cost once they are built. This makes off-plan an attractive investment opportunity for many investors.

However, in spite of the opportunity, there are important things to consider before an investor decides to invest in an off-plan property. These things serve as guide so that the investor doesn’t have any regrets afterwards.

Experts say that investing in off-plan property can be a great way to get one’s foot on the property ladder or to build property portfolio, adding however that it is important to make informed investment decisions by considering some important factors.

These factors are the property’s location and new developments or facilities, the developer, property type, payment terms, legal issues, and completion date of the property to be invested in.

Location and new developments or facilities

In real estate, as in other businesses, location is critical. The location is one of the most important things to consider before investing in an off-plan property. The investor needs to consider the local property market to see whether the area is likely to experience growth in the future. He should also consider the surrounding infrastructure such as schools, hospitals, transport links, and other amenities.

Read also: The impact of demographic trends on real estate in Lagos

The developer

In these days of frequent building collapse, knowing who is behind a project is an important consideration which is why an investor should research the developer’s track record and reputation before investing in any of the developer’s properties. The investor should look at their past projects, the quality of the construction, and whether they have a good track record of completing projects on time and within budget.

Property type

Off-plan properties come in many different shapes and sizes, including small apartments and large villas. An investor needs to decide what type of property is right for him and his investment goals. He should consider the target market for the property, the demand for that type of property in the area, and the potential rental yield or capital appreciation.

Payment terms

Before investing in an off-plan property, the investor should carefully review the payment terms. In most cases, he will need to pay a deposit upfront, followed by a series of staged payments as the property is being built. He should make sure he understand the payment schedule and whether there are any penalties for late payments or early withdrawals.

Legal considerations

Off-plan property investment often comes with legal considerations. An investor should, therefore, consult with a lawyer who is experienced in off-plan property transactions to ensure that the contract and terms are fair and protect his interests. You should also ensure that the developer has obtained all the necessary planning permission and permits for the project.

Completion date

Knowing the completion date of a property is yet another important consideration in an off-plan property investment. The investor needs to ensure he understands the timeline for the project and whether there are any penalties for delays. He should also consider the potential impact of any delays on his finances and investment goals.

In conclusion, investing in off-plan property can be a great way to get a foot on the property ladder or to build a property portfolio. However, it’s important to carefully consider all of the above factors before making any investment decisions. By doing your due diligence and seeking professional advice, you can make an informed investment that will deliver the returns you’re looking for.