Lots of investors are interested in investing in off-the-plan property. There must be some reasons why they seem to like the idea. It can’t be denied that off-the-plan sometimes is too tempting to resist. That’s why lots of investors decide to invest in. however, it is also important to know that the risk of buying off-the-plan property is higher. Investing in this kind of property means you need to really consider the risk and weigh. Of course, you can always invest in off-the-plan but doing it hurriedly is not a wise decision.
Why off-the-plan needs thorough consideration
Buying off-the-plan is interesting in the beginning because everything seems to be planned thoroughly into details. However, there is always potential risk looming around the plan no matter how neat it is made. There’s a lot things to worry about when it comes to investing in off-the-plan. It includes oversupply, lending criteria, property values, and many more. Many experienced investor call off-the-plan as ticking bomb. Here are things you may need to consider before deciding to buy off-the-plan:
- Time changes and it is inevitable. Along with the changes, comes other things that can influence your off-the-plan investment. For example falling property values. You may buy off-the-plan apartment today because the market seems stable. However, there is always a risk that the value of property in the market would fall two years later. What if it happens before the plan is completed? It will only ruin your investment plan. Other things that potentially change along the time include lending standards, vacancy rates, as well as oversupply. Those are important things to consider before buying off-the-plan property.
- Financial hassle is also included into things that will make your investment in off-the-plan got ruined if you didn’t think of it carefully. You see, when you buy off-the-plan, you can’t obtain pre-approval to finance your purchase. In this case, things such as lower valuations, value ratios, and deposit will be important factors you should consider if you want a successful investment. If you couldn’t handle this problem well, you might experience finance shock instead.
- The experts say that buying off-the-plan is like gambling. It is a gamble on how the market will perform. It is not a secret that lots of investor buy off-the-plan even before construction has commenced. However, things can go wrong during the period. Even if you expect that it the value of property will rise over two years or so, things may not go as you expected.
- There is also risk of negative equity. If you don’t have financial discipline to settle, you will face bigger problems. There are other risks of investing in off-the-plan. However, you can try to avoid the problems by asking some advice from the professional and experts. Consulting property investment strategist is not a bad idea to begin with if you are now considering off-the-plan property to invest in. This way, you know what you are getting into and what to do in your plan to make your investment successful.