4 Off Plan Buying Phases To Buy Properties Cheap
Rising building material costs, Naira depreciation, and a low Return on Investment (ROI) are some of the factors influencing the high cost of a new home in Nigeria. Because of these unfavourable conditions, the real estate market has become expensive and unappealing to most investors. However, the introduction of the off plan buying strategy has ushered in a low-cost payment option in which developers sell off their apartments to real estate investors before they are finished.
It is most common in major cities such as Lagos, Abuja, Ibadan, and Port Harcourt, where there are dozens of commercial and residential apartments.
- This investment plan has some appealing features, but what exactly is it all about, and are there any risks involved?
- If so, how does one go about doing so?
This post will go over these and other important aspects of the off plan buying strategies
What is off plan Investment?
Off plan investment, also known as off plan buying, occurs when a developer sells a house while it is still under construction for a variety of reasons ranging from finance to location. This purchasing strategy is typically initiated when the building is diagrammatically represented on paper for review and analysis.
If an investor sees the plan and likes the nature of the investment, the developer will then give in to the option of selling the property. Unfinished homes, like other unfinished projects, have varying finishing levels, which affects their prices. Individuals who purchase a home through this channel early on will typically pay less than those who do not.
In short, this off plan buying strategy primarily allows investors to direct when and how the project proceeds, while also protecting against high costs.
The benefits of the Off plan Investment
The sole reason why investors use the off plan buying strategy is to save money. It is, without a doubt, the cheapest way to buy a house, but it comes at the expense of the investor’s convenience and risk.
When an agreement is reached between the property owner and the prospective homeowner, the involved individual will be denied the right to move into the house immediately, which can be disheartening at times. They are also more vulnerable due to the uncertainty surrounding the home’s completion date.
Given the aforementioned factors, the home will be sold at a low price because both parties stand to benefit equally. Furthermore, off plan buying method allows investors to choose the type of housing materials to be used, such as
- Kitchen design
- Bathroom layout
- Interior structures and appliances, among other things
Profiting From an Off Plan Investment Strategy
The profitability of an off plan purchase method is enormous, and this attracts investors. There are two ways to accomplish this: the Buy & Hold method and the instalment method.
Buyers who use the buy and hold method primarily profit from bonuses earned after purchasing and holding the home for a set period. Property experts recommend this method because it is less risky and provides guaranteed earnings.
Because of the rapid growth of real estate in these areas, it is ideal in states such as Lagos and the FCT. The simple truth is that using the buy and hold strategy can save a home buyer up to 50% off the cost.
The instalment method, on the other hand, allows prospective home buyers to purchase homes in instalments. First, the prospective buyer must deposit a sum of money known as the down payment. Additional payments are made as the project reaches certain milestones, depending on the
terms and conditions of the agreement. To better understand this, consider the various stages of off plan investment.
Stages of Off plan buying
There are different off plan prices for each of its four phases. The following are the various stages of the off plan investment:
Off Plan Buying Phase One
This is the time when the developer and the rest of the project team have yet to begin work. The construction site has not yet been accessed during this stage, which is the most recent. Investors who purchase the house at this time stand to save between 60 and 80 per cent off the asking price. In addition, the buyer determines the project’s direction and collaborates with the engineers.
Off Plan Buying Phase Two
The second phase begins after the foundation has been laid and the laying of blocks has begun. Here, the project is still in its early stages, as the developer has not yet invested significantly in it.
At this point, the buyer will have purchased the home and may have received a 45 per cent – 60 per cent discount. Nonetheless, because the foundation has already been laid, the buyer will not be able to dictate how the plan will proceed.
Off Plan Buying Phase Three
The third stage occurs when the home’s finishing is nearly complete. During this stage, developers attempt to deck, make arrangements for doors and windows, furnish the toilet and rooms, and so on.
Buying a house at this stage will be more expensive, but it will still be a good investment. The buyer has a good chance of earning a 25 per cent – 45 per cent discount, and the quality of fittings, household appliances, and other home accessories is also determined.
Off Plan Buying Phase Four
The final stage is when the house is finished. It is still being sold as an off plan investment at this time, but the price will be high. In this case, the buyer may not receive a discount of up to 5%.
Buyers are advised to follow the process with due diligence, regardless of whether it is the final stage. There are some fees involved in this process, including the reservation fee, which is usually compulsory.
However, because of the dubious nature of human beings, homebuyers should hire their respective lawyers for proper legal documentation. When the buyer-to-seller agreement is successful, the keys are handed over to the homebuyer, and the transaction is completed.
The off plan property investment method is a safe, profitable, and cost-effective way to buy a home. In contrast to the traditional one-time off purchasing strategy, this strategy can save up to 70% off and generate a return on investment of more than 100%. It is a smart and innovative way to invest in the real estate sector.
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