M
mickthepropertyguru
New Member
OFFPLAN does not mean extra profit. Not anymore and for the foreseeable future.
Every single development that i know of, that have come to completition, have not gained that much or in many cases have lost money. Even when due dillegence was carried out, ie: you bought in the right place, good developer, right price per metre sq, etc.
This is due to many reasons, yes the Credit Crunch, yes the Recession around Western Europe is recking havoc, but mainly due to the lack of speculative buyers pushing prices up on themselves.
In every development that i know of, there are many investors who cant afford the mortgage, cant get a mortgage and are willing to sell at purchase price or less 2 or more years later.
Investy definitely hit the nail on the head when he said "dont purchase offplan" in a post made a few months or more ago.
In most cases the offpaln units were actually more expensive than resale units around it.
To all the first time investors, I'm telling you, don't buy off plan, let others take the risk and when completition comes and after you will be able to purchase the units at the same price 2 or 3 years before. Granted it probably wont stay like that but there is a time frame before and after completition that the price does not rocket because of many reasons.
There will be very few offplan developments built in the last few years seeing a noticeable increase for the next 2 -3 years.
Take your time and you will do far better than jumping onto the Offplan roller coaster, in which the only real winners are the agents getting 15%- 30% on each unit while you take the risk. Don't be so fast to put 50k in a property into an industry that you know little about, if you step back a bit you will see that this is the height of madness.
If you have to buy offplan, do not even show interest until you get a written price on a furniture pack. This is an expense that many don't think on and its something you will pay dear for. Many companies only give you a guaranteed rental if you buy there furniture pack which is usually priced a lot higher anyway.
Buying costs usually 5 - 10%, selling costs 5- 10%, furniture usually 7K - 10K (studio) and up, CGT: 18% - 20%.
With offplan you actually need good appreciation over the first few years just to break even.
Two things to bear in mind............
Your property is only worth the price you can sell it at, regardless of appreciation which is usually speculative.
A huge percentage of investors will not be able to sell their property when they need to.
Every single development that i know of, that have come to completition, have not gained that much or in many cases have lost money. Even when due dillegence was carried out, ie: you bought in the right place, good developer, right price per metre sq, etc.
This is due to many reasons, yes the Credit Crunch, yes the Recession around Western Europe is recking havoc, but mainly due to the lack of speculative buyers pushing prices up on themselves.
In every development that i know of, there are many investors who cant afford the mortgage, cant get a mortgage and are willing to sell at purchase price or less 2 or more years later.
Investy definitely hit the nail on the head when he said "dont purchase offplan" in a post made a few months or more ago.
In most cases the offpaln units were actually more expensive than resale units around it.
To all the first time investors, I'm telling you, don't buy off plan, let others take the risk and when completition comes and after you will be able to purchase the units at the same price 2 or 3 years before. Granted it probably wont stay like that but there is a time frame before and after completition that the price does not rocket because of many reasons.
There will be very few offplan developments built in the last few years seeing a noticeable increase for the next 2 -3 years.
Take your time and you will do far better than jumping onto the Offplan roller coaster, in which the only real winners are the agents getting 15%- 30% on each unit while you take the risk. Don't be so fast to put 50k in a property into an industry that you know little about, if you step back a bit you will see that this is the height of madness.
If you have to buy offplan, do not even show interest until you get a written price on a furniture pack. This is an expense that many don't think on and its something you will pay dear for. Many companies only give you a guaranteed rental if you buy there furniture pack which is usually priced a lot higher anyway.
Buying costs usually 5 - 10%, selling costs 5- 10%, furniture usually 7K - 10K (studio) and up, CGT: 18% - 20%.
With offplan you actually need good appreciation over the first few years just to break even.
Two things to bear in mind............
Your property is only worth the price you can sell it at, regardless of appreciation which is usually speculative.
A huge percentage of investors will not be able to sell their property when they need to.
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