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Why Invest In Off-Plan: The Benefits

Why invest in off-plan property? The Benefits Explained

This article will cover why we at MVP Properties believe off-plan property can be a great investment.

Jump straight to your favourite / desired section:

  1. What is off-plan?
  2. Below Market Value
  3. Leverage & Return
  4. Low Maintenance

1. What is off-plan?

Off-plan property is where you commit to purchasing a property before it has been built. While it is still in the planned stage. However, anything that is part built, or even just about to be completed is defined as off-plan. 

2. Below Market Value

Off-plan property presents a great opportunity to get a great deal. MVP Properties primarily uses relationships with developers to negotiate below market value deals.

Usually developers might want to establish a known amount of cash either at the beginning of the build stage or at the end so they can move on. This allows them to plan ahead and guarantee cash-flow. In return for establishing a sale the develop sometimes offers discounts. Win-Win for them and you.

3. Leverage & Increased Returns

One of the big benefits of off-plan is often the additional Return on Investment over the build. If a 10% deposit is put down in January for an off-plan investment completing in 1 years time, the price (plus any discount) agreed is at the value today. When completion comes, if the area is right, capital growth will have increased the value of your investment and added additional equity into your property before you have even completed. Lets say a property at £100,000 is and property prices have increased by 5% a year, the return on investment can be huge.

Investment: 10% / £10,000

Property value on completion: £105,000.

ROI on money invested: Over 50% / £5,000

This is one of the best things about off-plan. Your £10,000 investment has secured you an additional gain (equity) of £5,000.

This is further amplified if the property has been purchased with a discount. This is where MVP Properties can help.

In the above example, what if we had secured you a £115,000 off-plan property for £100,000?

Well then the property in an increasing market at 5% would be worth £120,750. So the gain is now over £20,000 in 1 year for a £10,000 investment. That’s an ROI of over 100%.

Once you have completed, you could sell and capitalise on this gain or rent the property out and begin to earn an ongoing rental return. A few years later you could refinance and use this equity to grow your portfolio even further.

4. Low Maintenance

Off-plan property is great for investors who want to be hands-off. The property can be made tenant ready very quickly. Brand new electrics, kitchen, bathroom and a 10 year warranty period. 

Clearly having a brand new property can reduce the ongoing maintenance costs and significantly make your life easier.

For investors who want to concentrate on building their portfolio and working on your property education. 

Ready to Invest?

MVP Properties have off-plan investments with discounts available right now. Get in touch if you want to know more. 

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