OFF PLAN INVESTMENT
More investors than ever have now decided to invest in property in Spain. Buying property has traditionally been seen as a "safe investment". Since the stock market is not at its best, many investors prefer to put their money into investments where they receive a greater return.
To buy from a "new development" is now the most common way to invest in property in Spain. Most of the new developments sell quickly "off plan". You can purchase properties for 20-25% off the market value and then find that their value has gone up by 20% in the first year. Therefore, many investors decide to sell them before going to completion. Other investors prefer to keep them - with excellent rental potential.
Everyday more and more people see traditional investments in pension plans, PEPs, stock investments, savings accounts, etc continue to fall in value. Therefore, the search for opportunities such as property investment in Spain off plan, which can supply a satisfying return on investment, has become the number one priority.
Southern Spain offers the most effective form of property investment available today. Currently returns on investment reach up to 40% per year . We have comprehensive investment packages and our knowledge and experience of this lucrative market is your essential guide to property investment in Spain .
Check our new developments to see what is available at the moment.
For more information, you can visit one of our seminars where you will learn the benefits of buying prior to construction and the process of managing a property portfolio.
The main interests of people who buy off plan are either:
- TO MAKE A CAPITAL RETURN, their main priority, which will maximize their investment return.
- TO BUY A PROPERTY, not have the use of it immediately, but to use as a rental investment.
What is buying property 'Off Plan'?
Buying "off plan", is buying a property in which the construction of it has not yet been completed and all one has is the floor plans and an artist impression of the finished product. One can buy off plan at any stage prior to the completion of the project. Once the sale of the property has been released (usually before the construction of it starts and can even be, before the building license is granted) anyone can buy. Usually at this early stage, the prices are very competitive because it is important that the developer sells as much property in a project as possible so as to secure better interest rates on their development loans from the bank and investors.
How to buy 'Off Plan'?
When a sale of the property is agreed, a reserve payment (usually €3000-6,000) is necessary to freeze this price. Usually 30 days later, this sale goes to contract of purchase, at which time 30% of the agreed price is payable. Sometimes, this payment can be staggered.
Then, nothing is payable until the building has been completed. All new developments should have a bank guarantee in place, which means that the bank will refund you your money should anything go wrong with the developer's project. Thus, when the project is finished, normally the bank will give an automatic mortgage of 70%.
Example
Agreed Purchase Price €220,000 (January 2003)
Reserve + Deposit = 30% € 66,000
Assume, at time of completion (December 2005) the property is now worth €260,000.
Now you can do 1 of 2 things:
1. You can resell the property, just prior to the project's completion, thus avoiding further tax, lawyers, notary and stamp duties charges. On the resale of your property, you would receive €40,000 profit.
2. You see the property to completion, avail of the mortgage and sell it at a later date to achieve a greater return or make income from renting it out.
Either way, this is a safe investment plan that has convinced many people to start investing.
Looking no further, it's no longer a huge risk!
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