Overseas Off Plan Property avoid the rip off
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?
 
6. If I decided to sell before completion of the project,
would that be possible and would I be penalized in anyway?
 
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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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
 
.