Off-plan Investments vs Tenanted Apartments
Updated: Sep 7, 2020
New investments bring with them the dilemma of what to go for in the property market. The main choices are to choose between an already tenanted, completed apartment or speculate slightly with an off-plan investment. Here we discuss the pro’s and cons of each.
These are developments or properties that have already completed. They already have a tenant installed and as such the return on investment is immediate, due to the tenant already paying rent. Depending on the developer/owner of the property these can be of any age.
The positives to this are that besides the return on investment, the tenant is already settled, paying rent and is likely to be happy within the property. When a property is already completed there is less risk associated with it because it stands already in bricks and mortar.
This means that dependent on purchase price, there’s a lack of real opportunity for a significant change unless there’s a project of redevelopment for the area. So while the property price may increase, there’s not the potential of the price skyrocketing as there is with an off-plan investment.
On the other side of Tenanted, off-plan investments are still being built and as such don’t have tenants already in. This means that the return on investment isn’t immediate, however the potential of these projects is usually what draws investors in.
Some people view this as a negative, as there is risk associated with off-plan investments, and in some cases this can be true as some developments are started and left incomplete due to lack of funding. The challenge here is finding a developer that fully funds their own developments so that sales don’t drive completion. We take this very seriously and all developers have to pass our due diligence before we take on a project.
Off-plan investments are often made in areas with significant potential and/or regeneration projects. Places like Preston have seen property prices rise considerably due to the £4 billion pound regeneration projects from the local councils and masterplans to take advantage of great links to areas around the UK. This means that rents and the rental profile are fantastic for investors, as well as the chance that a property they buy off-plan could rise considerably when the project is finished.
The negative to this is that the return isn’t instant and in some cases it can be some time. Investors usually appreciate that purchasing property rarely yields immediate returns though, as we see more people turning to off-plan investments, especially in the North West.
Get in touch with us
We have some great developments in our portfolio at the moment, both off-plan and completed. If you are interested in hearing more about our available projects please email us on email@example.com
Article from The Heaton Group