Are you up for buying off plan properties? Being a motivated buyer is good in the commercial real estate but make sure you don’t end up paying more. Since the market it quite tough, the real estate champs need to be smarter now. Especially in case of the off plan properties, you can’t go bluntly without having some great strategy. Furthermore, deals don’t just happen like a flicker as decision making plays a significant role.
In the real estate world, there are few problems that will surely occur when you intend to buy the off plan properties. All you need to do is just be prepared for them so that you can deal appropriately. In fact, then you will be able to make better educated decisions that that things go entirely in you favor most probably. Let’s dig in to discover those problem;
Many time people will sell you to buy a property off the plan because you look into the price early so that if the market goes up, then there are great chances for you to make huge profits. But here is the shocking news! What they don’t tell you is they are taking market predictions into account. You are obviously purchasing the property at what it’s valued today but they are predicting what market would be like in the near future. Therefore, you end up purchasing at an inflated price without even considering what market would be like tomorrow. In short, you are paying more for the property than it’s actually going to be worth.
Unsure of Market Trends
This is quite a horrible phase as nobody know whether the market is going to go up, will it go own or stay flat or constant. Since we have just discussed about the inflated prices, we need the market to go up so that you can get enough profits in the near future. May odds be ever in your favor, if the market stay flat or goes down, you are actually paying more for property than its actual worth.
This is one of the major problems with the off plan where you have got the long time period. In that time, you put your deposit down but you simply have no flexibility. But since you have decide which property to invest in, you put down the deposit and finally commit to purchasing. Now the property will be built that may take a year or maybe more than that and within this time, you can’t simply go out and research the market to see if there’s a better deal. You never know when the market changes, till then you are locked in and very much inflexible.
You’re Locked In, if Market Goes Down
As mentioned above, we are pretty unsure what the market will be like tomorrow. But what if it goes down, the investor is entirely locked and simply can’t do nothing about it. Since you have committed to buy and paid the deposit, alongside the market is also down, you are bound to purchase that property. Otherwise, you will not only lose your deposit but also the credibly in the market.
Commissions and Commissions
Like really! Yes. On every off the plan properties, there are built in or hidden commissions depending on who you are buying the property from. Whether you are buying it directly from the developer or the marketing company, there are good chances of commissions built-in to that deal. Therefore, the person who’s marketing to you and helping you purchase it isn’t actually the one who is building it. That mid-man is simply getting the commission on that property that you purchased. Since everybody is smart nowadays, that commission won’t be disclosed to you separately, it’s just already added into that builder’s cost that you don’t necessarily get to know about it.
Are you willing to invest into off plan properties? Here are few problems that you might stumble upon. Just check the article now