Overseas Off Plan Property avoid the rip off
Buying off plan property abroad can be very profitable business so profitable in fact investors can lose thier sense of caution. I explain how to avoid the scams and the questions to aske when buying off plan property abroad
International real estate investors are attracted to overseas property owing to the potential that it can offer in investment returns. One of the most profitable types of international real estate is off plan property. Some refer to this type of real estate as pre construction property which is bought at the planning stage. Buying a property before a brick has been laid does have its risks so how can an investor avoid these risks?
Firstly it must be understood why builders want property investors to buy property at the planning stage. This is often to raise finance so that the project can actually start. They may be also testing the water to see how popular the project is to buyers. There will be a few that are trying to simply steal investment money by going bankrupt before a brick is laid or running off with investors money.
The rewards can be substantial off plan property is priced to sell and allows for instant equity to be made by investors. Many property investors will only invest in off plan property as it allows them to buy multiple units which are often discounted by the builders. Often developers will give reassurances that indicate the planned selling price of each unit on completion. Some off plan property developments do not even have planning permission. Profits here can be substantial but presents even more risk. The price of land is always cheaper without planning permission. Once permission has been granted the land is instantly worth more. This coupled with a building that is going up over time can make for a sound investment.
A builder that has constructed a few projects before and has experience can be a good indicator that a builder will forefill his obligations. Deposits that are held in an escrow account will always make investors feel more secure. Employing an independent lawyer to conduct due diligence for you is another option. Recently launched schemes such as the International Developer Information Pack (IDIP) can help protect those buying and selling off plan property by providing independent due diligence reports.
Questions to ask the developer or agent
1.What guarantees do I have that the developer would not go under or this project would not go under?
2. Will my deposit be placed in an Escrow account
3. Tell me about the building company, what work have they done in the past
4. Has the builder secured planning permission and local permissions for the project
5. Are there any legal safeguards for foreign investors in the case of non-completion or poor construction work by the developer?
7. How easy is it to buy and sell property in this country? 8. What if I decide to sell my (residence/hotel suite)?
9. Are there any other fees while the project is being built and what about after completion?
10. What do you anticipate the rental income to be once the facility opens based on current rates at similar properties?
11. What is the payment schedule
12. What happens if the building is delayed
13. What is the rental yield I can expect?
14. What are the tax and inheritance implications
15. What is the buying process in this country
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ABOUT THE AUTHOR
Nicholas Marr is a lifetime property investor and CEO of Marr International Ltd a UK based property marketing company that is responsible for international real estate web site at http://www.homesgofast.com and http://www.findoverseasproperty.com