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By definition, off-plan investing means to purchase a property based on architect's drawings. Though all necessary permissions have been obtained by the developer, the building work is not completed at the time of purchase.
Developers get better and easier financing when a development is partially or entirely pre-sold.
Therefore they offer incentives to buyers who purchase at an early stage.
There are great advantages when purchasing property off-plan. Here are the some of them:
1. Off-plan properties are usually offered at a discounted price
In order to sell the development faster and at an early stage, property developers grant a discount off the actual market value.
For example, a property with a current market value of 100,000 EUR may be offered at 85,000 EUR thus giving you already a 15% discount off the market value at the time of purchase.
Further discounts are usually granted for bulk purchase of units in a development.
2. Less cash tied up
To initiate the off-plan purchase, a cash amount of 25-40% of the total property price is usually sufficient.
The remainder is often paid upon certain completion stages of the property or the development. This means for the investor that less cash tied up than if a completed development would have been bought.
3. Built in profit
The time of the building process usually takes in between 8-18 months. At the time of purchase, the property price was set at the current market value (minus an off-plan discount).
As property prices go up as they usually do, the property investor is enjoying already a property appreciation throughout the construction period. The property investor can sell the property to a new owner shortly after the completion at a higher price than he bought it for.
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