If buying raw land first isn’t for you, then maybe you'd prefer to look at a builder’s plans for a house and buy the property before it is constructed. Usually you'll get a substantial discount in price if you're buying before the house is built. And, you can make subtle requests or changes to the house based upon the plan, an extra bathroom or paint the house a certain color.
Investors still enjoy the same benefit of paying less overall, as you might when buying raw land, since you lock in at a lower rate, but don't have to have the land developed.
Due to inflation and fluctuations in the market, the price may rise by the time the property is completed, but by locking into the price from day one, you might see a rise in appreciation right from the start. However, a drop in price can occur as well, if the planned development is in an area that's already over built.
When buying off plan, or at the blue print stage, you do have to secure payment before the house is complete, so you won't have a renter but still be paying for the property. Many times though a develper will waive these fees as they want to get more owners on board to recruit others.
Besides the savings, another great perk to off plan properties is that during the planning stage, you can actually give your input regarding the building’s structural layout such as the size of the kitchen entryway, the addition of a fourth bedroom, or substituting French doors for standard doors. Plus, you can customize internal workings such as tile work, wall color, type of floors, and so on. What all this boils down to is that you can tailor the property to your target market, which in turn means your sale or renting of the property will be that much easier.
Although you’ll have to fund the construction of the property during its several phases, you can flip the property right before it’s completed, meaning that you’ll avoid the final lump sum payment at the end.
There are negatives to off plan buying, though. For example, a move-in date is not specified because several delays can push the completion date several days back, such as unfavorable weather or the need to re-order more parts. Another downside is that investors may flood your area and create competition that wasn’t present at the time the first brick was laid. But like everything in life, risk is everywhere. Weigh the level of risk you'd like to take and the confidence you have in the development and the local real estate market.
For more information about off plan properties, check out these sites:
Learn more: Splitting Your Lot