If you have ever wanted to know how to buy an off-plan property in Lagos, then kindly read this article for a step by step guide. This article describes what an off-plan property is, how you can find the suitable off-plan property, the benefits of buying off-plan properties and what to look out for before deciding to buy an off-plan property.
Tips for buying an off-plan property
Vet the developer: Only work with developers that has the capacity to finish the project even if the subscribers default on payment
Choose top locations: The best investment and off-plan properties are usually in top locations such as Ikoyi, Lekki, Victoria Island, Eko Atlantic and Banana Island.
Ensure that the property resonates with your goals: In order to successfully buy an off-plan property it’s important to properly evaluate the project offerings, location, price, payment plan etc to ensure it resonates with your long term goals,
What is an off-plan property?
An off-plan property is a property that is marketed before it is fully constructed. Marketing off-plan properties can commence even at any stage from the design to construction stage. If you are looking to buy an off-plan property in Lagos, it means that you want to key into the property or project before it is completed. An off-plan property can be any type of property. What makes it an off-plan sale is that the property is marketed before the construction is completed. In simple terms, an off-plan property can either be a house, or a block of flats/apartments. Most off-plan properties are referred to as projects because they are mid-rise or high-rise buildings with multiple living units.Benefits of Buying an off-plan property?
If you are actively looking to buy an off-plan property, then its likely because you are aware of the benefits that come with this property acquisition strategy. The major advantage of buying an off-plan property is to key into the project at an early stage. This ensures that you buy at a cheaper rate. Some of the key benefits of buying an off-plan property are:- Cheaper and below market rate: Early off takers of off-plan properties usually buy at a very low price. Most off-plan projects witness increase in price as the project progresses. So buying early enough gives you the opportunity to buy at a very lowered price. Also other factors affect the price of properties such as inflation, increase in cost of construction. An early off taker may be able to take advantage of low price from buying early.
- Investment: Some off-takers buy low so they can sell high. For instance if you buy at the early stage of construction, you may be able to sell at a profit even before the construction is completed. Waiting for the construction to be completed can also ensure higher return on investment. Buying off-plan properties is a very strategic investment strategy that can be used to grow wealth over time.
- Beat inflation: Investing in properties generally help to beat inflation. So along with the other benefits that comes with off-plan properties, you can leverage on off-plan properties to beat inflation. Rather than keeping your funds in a savings account in the bank which yields no profit, putting your funds in an off-plan project may appear to be a better way to save money.
- Flexible payment options: Another very obvious benefit of investing in off-plan properties is that it allows you to spread payment usually for a longer period of time. Unlike finished properties which usually require outright purchase, an off-plan project can be purchased via installment deposits that can spread for up to 24 or 48 months. The length of time in most cases however depends on the project completion date.
Risks you face when you buy an off-plan property in Lagos
While buying an off-plan property is a very good idea, it however comes with its own risks. Some of the common risks of buying off-plan properties are:- Project delay or abandonment: The most obvious risk that comes with buying an off-plan property in Lagos happens when the developer fails to deliver on its promises. This happens either when the developer has delayed beyond the promised delivery date or abandoned the project or has no capacity to complete it. This has happened many times and the developers usually blames inflation and rising costs of building materials.
- Fraudulent developers: In some cases, the off-plan projects marketed were means of defrauding the subscribers. The developers actually had no intention of developing the properties. This often leads to law suits and civil actions against the developers.
- Bankruptcy of developer: If the developer has become bankrupt or has run out of funds due to unexpected circumstances, then the project becomes abandoned.
- Default payment penalty: most off-plan projects come with strongly worded contracts that penalizes the subscriber for failure to pay any installment on the due date. The penalty could be in the form of interest for less serious defaults while refund of amount paid less some deductions may apply for serious defaults.
Steps to buy an off-plan property in Lagos
When buying an off-plan property in Lagos, it is very crucial to approach it with caution. This is important in order to avoid or mitigate the risks associated with buying an off-plan property. The following steps are very crucial:- Engage a Professional Real Estate Agent: It is very important to engage a professional real estate agent or agency to advise on the project, the developer and other information regarding the project. Buying through a professional realtor would help you understand the developers that are likely to deliver and also expose you to viable investment options.
- Engage A Legal Expert: A legal expert such as a real estate lawyer would assist you in conducting due diligence, advising you on contracts and other legal documents before you sign.
- Find the right investment property: Finding the right investment property is very crucial and your real estate agent can assist with that. It is important to choose a very good location and a project that would be delivered.
- Enter into a contract: Once the right property has been found you can then enter into a contract with the developer.
