Off-Plan Buying: Things to look out for
Off-plan buying basically refers to buying into a property before its completion. The concept has gained traction in Kenya driven largely by the challenging financing environment faced by both developers and end buyers. Buying off-plan is a great way to purchase a property below its actual market value, which makes it a great investment opportunity. For investors, most are attracted to off-plan due to the promise of property appreciation. On the other hand, developers offer low prices at the beginning of a project to make sure they secure buyers and investors as soon as possible. However, there have been cases where the promise is not delivered by the developer either owing to financial constraints or simply because they are unscrupulous. As a result, many Kenyans have lost their money or ended up with poor quality products. In off-plan buying, the decision is based on a developer’s blueprints and artistic impressions.
To avoid being duped as an investor or homebuyer, below are five key things to know before committing your finances.
- Is the Developer Trustworthy and Professional? Off-plan investments usually require you to make protracted payments throughout the development process and the balance upon completion of the project. As such, the developer should have a trustworthy team that will ensure that your money is secure throughout the period of construction and also be capable of seeing the project through its initiation to completion, successfully,
- Transparency and Accountability- The developer should be willing to divulge all crucial information that might help the client understand them better. This includes information pertaining to their projects. A credible developer will also be transparent with information on how your money is managed throughout the construction stages. You should receive regular updates either monthly or quarterly so you can see where every coin is going, and the work quality,
- Track record- The firm should have previous experience in real estate development. Find out how long the company has been in business and how many completed developments it has under its belt. You might also consider visiting the completed developments and talk to owners. Find out if they were completely happy with the home they received; whether the developer was responsive when they raised issues during and after construction; and whether they now feel they got value for money. Trustworthy developers remain responsive after the handover of the property because most new homes need some kind of post-delivery attention,
- Project Viability – Investigate the location of the project and the surrounding properties as well. As an investor, you want to make sure that the location is prime and attractive to occupants, especially as a buy-to-let investor. This will also ensure that there is a high probability that your investment will appreciate in value. To this end, expert developers should have their market feasibility studies which should be easily availed to you as a client, and
- Payment Options - An ideal payment plan should last up to the end within the completion dates of the project. Be sure to seek legal advice for interpretation of the contract that you are provided with before appending a signature. The contract should clearly state the amount of initial deposit agreed upon and then detail the specific dates when other payments are expected to come through until completion of the project.
In conclusion, when going for an off-plan property, the experience, and expertise of a developer are paramount. Most importantly, before signing for the deal, it is important to conduct your own property due diligence. Inspect the project, the land title deed as well as the project plan approvals. Review the project design and management team, and their capabilities. When comes to off-plan buying, information is definitely power!