
Category : Investment
This article covers the topic of flipping off-plan property in the UK, including the benefits, the risks, and how you can get started.
Investing in off-plan property can be an excellent way to grow your investment portfolio. Purchasing a property before it’s been fully built comes with numerous benefits, from a lower initial investment to the property’s value appreciating as construction progresses.
Property flipping - buying a property and selling it quickly after for a profit - comes with similar benefits. Combining buying off-plan with property flipping can be a high reward combination. Here we cover why this could be a lucrative investment strategy for you.
For more information on investing in off-plan properties, read our complete guide on the topic.
What is off-plan property flipping?
Flipping an off-plan property involves buying a property before construction is complete, and then selling it off immediately after the property is completed (or in some cases, just before completion).
This comes with the key benefit of making a profit, but there are also a few risks involved for investors to be aware of.
The pros of flipping off-plan property
By purchasing a property before it’s fully built, and then selling it shortly after, you can unlock a range of benefits that aren't typically available when buying completed properties.
Lower initial investment
Off-plan properties typically require a lower initial investment compared to buying a completed property in the same area. This lower initial financial commitment makes this more accessible to a wider range of investors, such as first-time buyers and those with limited financial resources. Developers also often offer incentives, such as discounts or payment plans, to encourage investors to buy off-plan.
Capital growth
Possibly the most significant advantage of flipping off plan properties is the potential for the property’s value to appreciate as construction progresses and the market value increases. Investors then have the opportunity to sell at a higher price before or soon after completion.
This strategy is especially appealing in the UK, where the property market is known for its steady growth.
Are there any risks involved?
When you purchase off-plan, you're committing to buying a property that has yet to be built or is still under construction. It's important to consider the risks of this.
Change in the local market
Flipping off-plan properties comes with the risk of changes in the local market. Although off-plan property value will generally increase over time, fluctuations in the market can impact profits to be made through selling your property. The risk of buying at an inopportune time could land you with a property that’s difficult to sell.
This is why it’s important to understand the risks of this type of investment, and correctly purchase in areas and properties which have a high potential.
Development delays
Whether it’s delays due to labour shortages, poor weather, or simply unforeseen complications during the construction of your property – the outcome can lead to extended completion times that could delay your return on investment. While this is largely out of your control, it can become an issue if you have any financial obligations that rely on the completion of the property.
Finding a buyer
A risk anyone flipping any type of property takes is finding a buyer for the property. If for whatever reason you’re unable to find a buyer, you would need to complete the purchase and become a landlord, which comes with its own complications and risks if this is not your goal.
Working with a property management company
Having a wealth of experience in property investment can reduce any risks associated with flipping off-plan properties. This is why many investors opt to work with a property management company like The Right Property Group.
Whether you’re an experienced property investor, or just starting out, we give you the tools and knowledge to carefully select and purchase off-plan properties. Simply get in touch today to talk through your options.
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