The Off Plan Strategy
Many people have heard the phrase 'buying off plan', but what does it mean?
Buying off plan basically means buying a property that may not be completed yet, in fact it may only exist on the architects plans hence the term 'off plan'. You literally look at the plans and decide which property you would like to purchase. If it is available the property can be secured until contracts are issued by placing a holding deposit with the agent.
Property prices are lowest at the beginning of the sales process. This is usually because construction has not started yet, indeed the developer may not have licences in place to start the building process. As the whole project gathers momentum the developer must first acquire the land, planning consent must be given and the final building licence obtained. If the development has been marketed as a 'pre-licence' development then the land and licence acquisition can sometimes trigger a price increase for those seeking to purchase at this stage.
As construction starts the developer may build and furnish show apartments as this will help to drive sales. As construction continues it is likely that there will be further price increases triggered by the completion of different build stages. Prices are usually highest on completion for an off plan development and some investors will consider selling their property just prior to this point, others will not sell at this stage prefering to let their investment mature which may bring greater rewards.
BlueFish Property Services Ltd have used this off plan model to look at the risks and gains that are associated with off plan investments. We have formulated a strategy that will give good returns with minimal risk.
The Basics
It is easy to understand that investing at the beginning of a development can lead to the best financial rewards, but at the same time the risk factor is at it's highest.
Similarly investing later on is less risky but can diminish the financial rewards. It is the risk reward balance that is important to any investor. Bluefish Property Services Ltd offer quality developments that have been subjected to rigorous due diligence and this will make them attractive to prudent investors.
Early Bird Strategy
The early purchaser always secures one of the best units on the development, so we always advise early entry on any quality development. Properties with the best golf or sea views will have better capital appreciation and will be easier to rent out or sell on.
'Buy to Let' Investment in Morocco
The rental market in Morocco is certainly more advanced than most emerging markets. It is noted that 85% occupancy is currently very common during the high season months.This figure is set to increase as Vision 2010 drives tourists to the Moroccan resorts faster than property can be built to accomodate them. The goal of all 'Buy to Let' investors should be to cover associated mortgage payments and generate a secondary income stream from their property investment. Morocco looks to be a great location for investors to use this 'Buy to Let' strategy with the aim of covering all mortgage payments and bills for the year by rental income generated from the high season months(4 months, July - September). As a guideline only, it's expected that during this high season period rental from a 2 bed apartment costing €100,000 should produce rental returns of €2,000 per month or more for the investor.
Exit Strategy
Always make sure that you are not stretching your money reserves too far. You should be able to comfortably wait for a sale if you put your property on to the market.
Questions to ask before purchasing
1. Is the property freehold or leasehold?
2. What are the communal charges in this resort?
3. What are the local tax implications when owning a property on this resort?
4. Is my initial deposit refundable if I choose not to go ahead with the purchase?
5. Is there a mortgage already in place for this development?
6. Are my payments to the developer going into a secure client account such as an ESCROW account?
7. Are there any bank guarantees in place for the monies I will be paying over to the developer in the case that something goes wrong with the development?
8. Am I tied in to any rental scheme that would restrict my personal usage of the property?
9. Are there any penalty clauses to protect me the if the development is not finished on time?
10. Is there a building guarantee with my property?
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