Advice for early bird new home buyers: Part 2
Buying an off-plan project can be a scary concept for prospective home buyers, but it can be advantageous in terms of value for money, premium locations of property – and lucrative promotions. Last week, realestate.com.kh discussed these factors in Part 1. This week we will explore the process and associated benefits in more depth, to ensure any impending purchaser feels fully informed about buying off-plan.
Here are some more factors to consider before making a decision to purchase
any off plan unit, thanks to Realestate.com.kh:
How can I determine the value of my off-plan investment?
If you are considering an off-plan purchase as an investment opportunity to generate rental income or to resell, it is important to keep in mind that buying off-plan can involve a substantial waiting process. If you cannot afford to wait a minimum of at least two years before seeing any kind of income or capital appreciation, an off-plan purchase may not be the best type of investment for you.
In real estate, looking at comparable properties (“comps”) is the best way to determine the value of your investment. However, when you buy off-plan, this is not an option, as any comps would purely be speculative. This can lead to inflated estimates of what people think the value of their off-plan property will be, especially in areas with a reputation as a “hot spot’’. In order for you to be as realistic as possible, check out the surrounding area with a very critical eye. Find out as much as you can about the area and about other properties for sale. This is the only way to get an honest estimation of what you can expect from your purchase.
How long before my project will be completed?
When you buy a villa, payments may be spread out up to the point of the completion date, which may take up to 18 months. A condominium may take as long as 24 months, and some projects don’t even mention the specific completion date and can take up to three to four years. Keep in mind that some construction plans may fall behind schedule, so be prepared to wait.
How can I protect myself if construction plans fall behind schedule?
It’s critical when you purchase off-plan that you ask the developers for the expected date of completion, and your move-in date, and that this must be included in the contract. Your contract should also contain details about your rights, if that completion date is missed. In some circumstances, laws are in place that automatically require the developer to pay penalties, even if the contract does not provide for it. However, don’t bank on that always being the case. To fully protect yourself, make a clear agreement between you and developer before signing the contract about what happens if the completion falls behind schedule.
Look out for Part 3 next week when we explore why you should consult a lawyer when purchasing off-plan, and for a summary of this approach to entering the property market.
Looking for off-plan properties today at Realestate.com.kh or missed seeing Part 1, go to our website.
James Whitehead is Director of Content @ Realestate.com.kh