Buying off plan or pre construction real estate has huge investment benefits, investors will pay way below market value for a property that is in the planning stage. It also can offer consumers a gradual payment plan that will see the purchase of a brand new property over a few years. Developers use investors the money to finance the build and to put in early profits into the projects. On the face of it its a win win situation however the amount of companies that have gone into administration has put international investors off this type of investment.
I believe off plan property is still viable investment if you tread carefully and secure vital information that you can verify.
Here are 15 questions you need to ask a property developer
- What guarantees do I have that the developer for this new property will not go into administration
- Will my deposit be placed in an Escrow account?
- Tell me about the building company, what work have they done in the past?
- Has the builder secured planning permission and local permissions for the project?
- Are there any legal safeguards for investors in the case of non-completion or poor construction work by the developer?
- If I decided to sell before completion of the project, would that be possible and would I be penalized in anyway?
- How easy is it to buy and sell property in this country?
- What if I decide to sell the property before completion?
- Are there any other fees while the project is being built and what about after completion?
- What do you anticipate the rental income to be once the facility opens based on current rates at similar properties?
- What is the payment schedule?
- What happens if the building is delayed?
- What is the rental yield I can expect?
- What are the tax and inheritance implications?
- What is the buying process in this country?
In all investments there is a level of risk the more risk the higher returns it is good to get a payment schedule that is linked to a developments progress this will help reduce risk.
My opinion is that any new development will have to take in consideration that nearly 50% of all mortgages are under water in this country and the impact will be felt by everyone of us. . .regardless what market you are under.