Home - Finance - InvestingCan You Really Make It Rich With Buying Off Plan?You're probably eager to find an investment plan that will make you a lot of money. During your search, the words buying off plan have been tossed around many times. What is buying off plan? You're probably eager to find an investment plan that will make you a lot of money. During your search, the words buying off plan have been tossed around many times. Related Writings: The Secrets of Performing Tax-Deferred Exchange - In real estate investing business, performing a tax-deferred exchange can be a great way to maximize your wealth What is buying off plan? This is where investors purchase a property that doesn't exist. I'm not referring to buying a make-believe property! I mean one where you're relying on a development company to build the property. How does the process work? You may have seen eye-catching brochures for the development of a fancy new luxury resort. You're invited to invest in this property and receive a discount if you do it early. You're told you can sell during construction or after project completion for a huge profit. Related Writings: Some Good News For A Change - A look at one couple who used their lottery winnings to secure their financial future by investing in a leaseback property scheme made popular in France. This sounds too good to be true! Well, let's look at this from the developer's point of view. The developer has enough money to draft the plans and print enticing advertisements for his proposed development. However, he needs a lot of money for the land, and his bank requires security. What does he do? He entices people like you to invest early in his property by offering you a discount. He uses the investors' money to obtain a bank loan for the land. Related Writings: Black Swans Fat Tails and Financial Markets - A black swan is an event that is truly disastrous when it does occur but fortunately, according to the investment models, will occur very rarely. So rarely, in fact, that it makes no sense to worry about it. Could it be that the Wall Street bright boys have that all wrong? Administrative staff then begins collecting more money from additional investors. At this point, the developer should have sufficient funds to begin construction and pay the builders. He can start the project without having any money withdrawn from his account! Now, let's look at the same investment from the investor's perspective. You invest early in property for a hefty 15% discount. One year later, the price increases by 10%. You wait another year when the price increases by another 10%. If you sell your share in the property, you could end up doubling your money! Related Writings: Things To Look For When Buying A Buy To Let Property - A look at the investment potential of a buy to let property and the things to look out for. So you and the developer both win, right? WRONG! Before investing in buying off plan, consider the following: 1. You must sell your apartment or property within a tight timeframe which requires many buyers and a liquid market 2. You won't receive your money back or a deposit refund if the project fails 3. Prices have to rise quickly for you to make a profit you'll make nothing if they remain static or rise slowly Related Writings: Introduction to Stocks - An introduction to investing in stocks for beginners 4. The initial valuation of the property must be correct; if it's overvalued by even 10%, you'll lose money 5. Investing in foreign tourist markets is risky because locals can't afford the resale property Now, you have the true facts. Unless you're a developer, stay away from buying off plans! About the author: Surrinder Ahitan offers free property investment advice and tips on how to invest in residential and commercial property for maximum returns.Visit http://www.best-investment-property-tips.com where he reveals more valuable insider tips and property secrets. Home - Finance - Investing |