Top 7 Questions to Ask Yourself Before Buying Off Plan

Buying off plan with the intention of renting out can be risky if you don’t consider certain aspects of the finished property. These include things like the location, the potential for profit and the attractiveness of the property to tenants. With this in mind you should consider the 7 questions below before buying off plan.

1. Is the off plan property being sold for a reasonable price?

Research the prices of similar properties in the areas around the development and see how they compare to the off plan properties you’re interested in. If the numbers don’t tally you might want to consider buying off plan units on another development.

2. Will the property deliver an adequate rental yield?

Property developers have a tendency to slightly exaggerate the possible rental yields from their off plan properties. For this reason it is important that you get a second opinion regarding the possible yields; just to check it is worth buying off plan on a particular development.      

3. Is the location favourable?

It’s pointless buying off plan property in an undesirable area, regardless of whether the undesirability is due to crime, unemployment, lack of regeneration or anything else. Remember that the whole point of buying off plan is to rent the property out when completed, and buying in an area that is unattractive will make renting the property virtually impossible.

4. Is the development investor-only?

An investor-only development will mean that all of the completed properties will be on the rental market at around the same time, and as a consequence you’ll have a lot of competition with regards to attracting tenants. Check to see if the development is being completed in phases, and if it is try to buy a property due to be completed in the first or last phase.

5. How many other property developments are planned for the area?

If the supply of new property outstrips the demand you’ll have trouble renting your property out for the maximum rental amount when the time comes. Research whether any other developments are planned for the next few years, and if they are consider buying off plan there as well.

6. Is there a demand for the type of property you want to buy?

Before buying off plan it’s vital you ensure there is actually a demand for the type of property you’re interested in buying. So for example, don’t buy a 4 bedroom house on a new development if the area is generally populated by working or retired couples. You might also want to make sure the rental amount you intend to charge is affordable by people living and working in the area.

7. Has the property developer got a solid reputation?

Property developers with numerous completed developments under their belt and a good reputation to go with them are obviously a much safer bet than those who are embarking for the first time. Try to visit some of their past projects and ask around to find out how good their other works are.

In Conclusion

Think about your potential property purchase with a ‘buy to let’ frame of mind before you commit to buying off plan. Make a mistake and you’re stuck with it until the opportunity arises to sell, and if you can’t sell because of the market you may not make any profit from the purchase for many years to come.