Off-plan property offer cheaper entry opportunity into real estate
When Atinuke, who was a middle-aged single woman with 2 kids, responded to an advert about investing in one of our listings, she did so with the assumption that she would be getting an already built house.
This taught us that the communication of what an off-plan was and how it works was still a mystery to some or many – at the time.
Fast forward to 2021 where about 80% of the properties predominantly marketed are off-plan projects, the challenge has shifted to ensuring that homebuyers are able to truly get value for their money as well as choose the right off-plan for themselves.
The reason I say this is that if there is a growing number of buyers who are unhappy with their property subscription, then the housing deficit might actually become worse than it already is as those initial buyers would be looking to offload property they are unhappy with at the new price value.
Are you considering an off-plan property? Then these 8 tips of how to go about it would definitely become a very handy guide to keep safe to heart.
First, let me give a mini and crash course into what off-plan property buying is and why buying off-plan has become more of the choice to go for as homebuyers.
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What is off-plan?
This is the practice of buying property right off the drawing board where all this physically visible are the architectural drawings and design plans. In most cases, there is no structure or substructure to use as an assessment – except the reputation of the developer.
Why are off-plans becoming a preferred choice among property buyers?
In one word, flexibility.
- The cost of property VS the cash buying power of the target populace is highly misaligned
- We don’t have a highly favored credit system that encourages payment plans.
- Requirements for mortgage loans aren’t yet well embraced by both of buyers and the sellers
- Considering that the houses aren’t built, buyers feel they have some control over what is being built without over exposing themselves
Coming back to the main topic at hand, here are 8 things you should do and get answers to as a way of assessing if you should invest in a particular off-plan property project (well, 8 plus 2 bonus points, lol!)
1. Understand what exactly is on offer.
- What is the type of house/property to be built?
- What is the layout (interior &external)?
- If it will be serviced or not
- What pricing benefit are you getting?
2. Inspect the location
- Do this with your target in mind, the environment matters
- If there is infrastructure already then good; if not, is there a plan for this?
3. What is the price on offer?
- Should be competitive with the current market rate
- Should have an easy payment plan
- If you are paying outright, then a special offer should be included
4. How long will it take to complete?
- At what point can you get access to start customizing your unit?
- How often will you get project updates?
- What is the contingency plan for delays?
5. Who is the developer? Know their profile and track record.
- If possible, try to inspect previous projects they have done or are in the middle of completing.
- Maybe do a CAC check also
6. What documentation do you get as a buyer?
- At the very least, you must get a contract of sale, a Deed and you can ask for a copy of their original title deed for your records
7. Can you get the Due diligence done now?
- Please ask your lawyer to help with this – key things to confirm are the root title, the survey plan and that the property is not in contention (Lawyer talk, lol!!)
8.What other information about the property can the broker give you?
- What other details can you confirm from the inspection?
- What does your gut tell you? (you too need to feel good about this)
9. Get a property lawyer to review the contract of sale with you when you do agree to proceed with this.
Clauses that I advise you should ensure are non-negotiable for inclusion
- Non-performance clause
- Force Majeure
- Indemnity clauses for both parties respectively
10. Stay abreast of the market prices and opportunities as remain valid at each point in time. To do this, you can sign up to a property listing platform that has a proven track record of giving regular updates.
Do this with the intention to walk away from any deal/offer that seems either too good to be true without backing or is not meeting up to basic scrutiny.
Have you had any experiences with investing in off-plan property?
We would love to hear about them – without naming names or otherwise.
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