The Benefits of off-Plan Real Estate Investment-The Panagora Blog

 

Did you know that off plan property investment do have high potential to produce incredible capital gains and rental income when done right?

Planning ahead to maximize your profit and benefits means crucial time managemant skills.

Femi Otedola Founder of Zenon Petroleum Nigeria was listed on FORBES billionaires list in 2009.

Following a major plunge in the shares of African Petroleum (now Forte Oil), the same man fell off the list and joined the list of Nigeria’s major debtors- owing banks around $900 million

After Femi Otedola lost everything, he made a come back using real estate. He was able to recover by selling of over 180 flats and houses to pay off his debt, according to CNBC Africa.

Today Femi Otedola is back on the Forbes list of billionaires, and with this example shows the impact the real estate economy has.

WHAT IS AN OFF PLAN PROPERTY?

The term ‘off-plan property’, refers to, property which is available for purchase before it has been constructed.

An off-plan property can take one or two years to complete. You put down an initial deposit of around 10%, with staged payments until completion.

This will give you enough time to raise money. One of the biggest attractions of buying off-plan in Lagos is the discounts available on the property, some investors can receive discounts of up to 15% on the price of the asset.

If you’ve put a deposit of 10% on the off-plan investment property and the property value rises by 20% before completion, you’ll have made double your deposit.

However, how do I know when to buy an off plan property? Remember this…The best profits are made when you buy off-plan properties at the best time!

You will learn how developers sell the off-plan property in this article.

However, why is this important?

The real estate market booms and busts most times as a result of economic inflation, off-plan property investment gives control over your investments despite economic inflation.

You can invest and still be able to make high profit like a pro investor.

OFF-PLAN PROPERTY LAUNCH 

The uneducated investor get in when off-plan sales are launched to the public when almost halve of the cow has been shared to the smart educated investors.

At this stage, it’s often sales agents or estate agents that create a big publicity. They’ll advertise in local and national press ahead of a launch event.

Keep in mind the launch event might include open days, seminars, and champagnes. There will be glossy brochures produced, and on-site agents will be falling over themselves just to walk you around the show home for a commission.

To the new and uninitiated investors, this launch is the first opportunity they would have had to invest in the development. However, it’s probable that all the best units have already been snapped up by the smart investors. 

What you missed here is that, before the launch, and before the local estate agents have been given the opportunity to market the off-plan and new build properties, there would already have been a lot of buying activity done by the developer.

OFF PLAN PROPERTY LAUNCH(THE PREQUEL)

I have visited new development property launches and discovered the best units already sold out. It made me wonder, how did the investor become aware of the development of the property before it was launched?

This is simply because the prequel to the launch has already taken place.

Real estate investing has taken a drastic step forward in how technology and development come together with providing resources for off plan property investment.

I don’t know about you, but when I watch movie at the cinema and then the studio release a prequel I feel kind of cheated.

It’s like there has been a whole story that was kept secret from me. The off-plan property market works in a similar way.

 

The advantages that off plan property has for every real estate investor is being conscientious and economical with time, and with dedicated research and perfect timing anyone can achieve that ultimate goal.

WHO ARE THESE SMART INVESTORS GETTING ACCESS TO THE OFF-MARKET SALES?

The simple answer is, Investment Companies and few selected top smart investors. This simply means that there were investors ahead of you who were let in on the secret sales before the main event. They took the best plots and got the best deals already. These off-plan sales were made off-market.

You see, as an entrepreneur, 81% of the time you can borrow money easily from the bank when you don’t necessarily need it. But it’s a whole different story when you are truly in need of funds, it’s because banks are not very entrepreneurial when it comes to lending money.

when real estate developers and construction companies receives permission to build, they need to finance the development to get started.

They can either go to a bank, which usually wants to see concrete proof of the ability for the developer to pay back any loans.

Obviously with no more than a few acres of land and some drawings to view, banks and traditional lenders are hesitant to put up the cash the developer needs to get started.

This is where the smart investors come in, they are willing to accept some risk, providing the potential rewards are worth it.

So, behind the scenes, and before the official launch, the developer often sells the off-plan property to investment companies and top investors. This does two things:

• First, it provides the developer with the funds needed to get the ball rolling and kick start building.
• Secondly, the developer now has enough concrete sales to show the bank. 
•  
• He can now negotiate better rates, and the bank will be more willing to lend with the knowledge that there is demand for the properties proposed.

WHAT DO I BENEFIT AS AN OFF-MARKET BUYER?

Think about this, for the investment company to buy properties that are not yet built on a development that may not even have had its ground broken, there has to be more than a great vision.

The incentive for the investor is always the potential profit available. Remember for the smart investors, the higher the potential profit, the more likely he will put his money on the table.

Investors who buy pre-launch are offered incentives to invest and buy the developer’s early-stage off-plan properties:

• 1.Discounts to market value.
• 2.The pick of the best units in the development.

In every off plan property development, every stage of the project has a different price tag.

As the development progresses, the developer becomes less inclined to discount prices and investors will be buying units with the lower resale appeal

HOW TO GET THE BEST OFF-PLAN PRICE

The earlier you invest in off-plan property, the more likely it is that you can negotiate a better discount and buy the best unit.

The thing is that, developers tend not to sell these off-market units to individual buyers. It’s expensive for them to do so, as well as being time-consuming.