Real estate has taken off as a viable investment opportunity in the country. It is a fixed asset whose cost and value are ever increasing. There are various ways of acquiring these assets, and off plan is one of them. Buying off the plan means committing to buying a property that hasn’t yet been built. In other words, you make the decision based on plans and artistic renderings of how the apartment might look, in addition to information about the project and developer. There is no physical location as such to be inspected, but rather you must trust that the delivery will be nothing short of your expectations.
According to Estate Cloud, in the most recent Kenya Homes Expo, a quick survey of the properties on the show would reveal the fact that more than 70% had off-plan options.
Here are the advantages of buying off the plan properties
- You get to pick the location
When you buy an off-plan property, you get to decide exactly where you want your property to be. If it’s an apartment, you choose the floor that you want, and most likely with the best views. You choose the block where it will be. On top of this, buying off the plan allows you to make a few changes or improvements within the set price. This is very important, especially for those who plan on reselling the property because it offers a unique value proposition over the competing sellers.
- You get to pay in instalments
With the rising cost of properties in Nairobi, it may, in fact, be close to impossible to pay fully for a house upfront. Which is why the off-plan property is viable. It allows you to pay for the house at different stages of its construction. The settlement can be as far as three years away which gives you time to deliberate on raising money to complete your payment.
- Your property is new
The best thing about off-plan properties is you get to own a property that is brand new and has not been occupied previously by another person. Whether you choose to live in it or rent it out, it is brand new, and everyone is attracted to new things. This is why you might want to consider investing in an off-plan property.
- Your property increases in value
Between the period when you lock payment for an off-plan property and the time when it is completed, the property is likely to appreciate in value. This is definitely a good thing because if you choose to sell the property once it is completed, you will still make a profit.
However, there are a few things you have to note when it comes to buying off-plan properties. Like all things, this too has its disadvantages. The important thing is that before you invest you make sure that you have full knowledge of the possibilities that could come from it. Here are the disadvantages of off-plan properties:
- The builder could go bankrupt
Some of the possibilities are completely out of your control, such as the builder going bankrupt. This can be a huge problem, especially because it might take years before the project actually comes to completion. In some cases, the builder may not even refund your money. That’s why it’s important to go through the contract before investing in such plans. Furthermore, you might want to do some background research on the construction company before deciding to invest with them.
- The finishes might not be what was promised
Here’s another thing. Sometimes what you invest in might not be what you get out of it. You may end up highly disappointed by the final outcome of the property. This is one of the greatest disadvantages. The fact that you invest in something that is yet to be constructed might end up being a major disadvantage for you. If this happens, you will be sort of trapped because you have already invested in it. The only way out would be to sell off this property, but then again the potential buyers might just be as disappointed as you are.
- High strata fees
Strata fees are contributions generally paid quarterly into the strata plans bank account. These fees are used to fund the ongoing expenses of the scheme for things like cleaning, gardening, electricity and building maintenance, plumbing works etc. When it comes to off-plan properties, these fees may sometimes be high, therefore you might want to find that out before investing in the property.
- Loan disapprovals
For many off-plan properties, the builder does not consider the financial capability of the investor. What happens is, as long as you pay a deposit at the start of the investment you will get the contract. But what happens when your bank does not approve your loan and you are unable to complete the payment? Some of these developers seize your deposit and you end up losing out on all the money.
Here is a Home Buyers Guide To Buying A New Home
Lifestyle: Pros And Cons Of Open Floor Plan Homes
Lifestyle: Costly Mistakes To Avoid When Building Your House
The Pros And Cons Of Buying A House In A Real Estate Development