Questions you need to ask your property consultant to make sure a property is right for you

Property Investment Questions

Whether you’re taking steps towards becoming a property investor by buying your first rental property or you’re adding to your existing portfolio of properties, whatever the reason for buying a property for investment, it’s important to ensure that the particular property you’re considering is a good investment prospect and is well suited to your position and future plans.

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What’s the developer’s reputation like?
Is there a rental assurance and how long will it last?
Will this property work for my 5, 10 or 15-year plan?
What is the timeline for the building?
Will there be any regular charges once the property is built?
Who will find tenants for my property?
What is the reservation cost?
How will the buying process work?
What’s included in the price?
Is the price fixed?
Why buy off-plan?
Why do you think this property is best for me and my situation?

Here are the questions we’d propose you ask your property consultant to ensure a property is right for you:

What’s the developer’s reputation like?

When purchasing off plan and investing in a property development you are investing in the developer and trusting that they will build the property that will bring you financial success.

Working with an investment specialist who’s vetted the developer and the individual opportunity will provide assurance.

Is there a rental assurance and how long will it last?

Knowing the yield being provided as a rental assurance and how long it will last for will allow you to properly plan financially.

To learn more about rental assurances read our post on the subject.

Another question might be, are there reviews of the rental assurance? For rental assurances that are set to be in place for longer periods there might be annual reviews to ensure the market hasn’t moved on considerably.

Will this property work for my 5, 10 or 15-year plan?

Your property advisor should know about your plans for the future – allowing them this insight will ensure they only propose properties that will work for those plans. If you’re considering a property in an up and coming area that won’t realise it’s full capital appreciation potential for a considerable period yet you have plans to move on in a shorter time frame then that property should be discounted.

What is the timeline for the building?

Has planning been submitted and approved? When will works begin? What is the projected completion date?

These are all important questions and ones you should ask your property consultant when buying property off plan. During the period of construction you will have funds committed to the purchase

Buying property off plan can be hugely rewarding in terms of capital appreciation throughout the period in which the property is being built. Rental investors need to know when a property is expected to be complete and when tenants could move in thereafter.

Will there be any regular charges once the property is built?

When you own a property within a development you will have to contribute towards the running and maintenance of the building and grounds. For the most part, newly built flats are sold as leasehold and the freeholder will charge a ground rent to all leaseholders so it is important to understand what this figure will be and when it will be payable.

The freeholder will usually employ a management company to run the building on their behalf and the cost of the management is usually included within the service charge. A service charge will include buildings insurance, electricity for communal areas including the running of lifts and overall maintenance including cleaning of the entire development inside and out.

Buying off plan will likely mean that the building won’t incur costs to be paid via a service charge as there’ll be nothing to maintain or pay running costs for until it’s completed. This makes it difficult to provide a fixed figure for service charges as, for example, the cost of electricity might go up or down in the time between securing the property and completion of the built. You should be able to ascertain a ball park figure of what the service charge will eventually be.

Who will find tenants for my property?

For rental investors there is often an appeal to being completely ‘hands-off’ meaning someone else is in charge of the management and maintenance of the property and they will also take care of finding suitable tenants for the property.

In the instance that a property is bought with a rental assurance in place there is really no need for the landlord to worry about tenants during that period as the management company will be paying the rent based on the assured yield whether or not a tenant is in situ.

What is the reservation cost?

Buying a property off plan will usually mean that you must pay a reservation fee immediately to prove your commitment to the purchase and avoid another party from buying it themselves.

In some case the reservation fee can be very low; as little only a few thousand pounds but significant nonetheless as it is usually not refundable in the instance that you change your mind which is why it is important to ask all of these questions before you commit financially to the purchase.

How will the buying process work?

It might be the case that there is a flexi pay plan available meaning you can pay in instalments at your pace with a set deadline for the full payment. It is usual for those buying off plan to be required to pay in instalments at fixed intervals so check the timeline; how much will be due and on what dates. You need to know that you can meet these deadlines before you commit to a purchase.
When is the right time to approach lenders when buying off plan?

Most mortgages expire within about 6 months, although it can vary from lender to lender. This will dictate when you will begin the formal mortgage application although it is prudent to get a mortgage approved in principle at the very beginning before you commit to a property. Some mortgage offers can be extended but this will depend on the time between exchange and completion of the build, each case is unique.

Working with an experienced broker is the sensible choice when purchasing property off plan as they’ll know the lenders best suited to your position and the property in question and manage the timelines on your behalf.

What’s included in the price?

Not just the fixtures and fittings or even furnishings, it might be that there’s a parking space included or in some cases developers might pay the stamp duty. Always ask what’s included when buying property off plan.

Is the price fixed?

People in property are always looking for a deal, being one of the first to commit to a build can often open the door to discounts so it’s a good idea to check you’re securing the property for the best possible price.

Why buy off-plan?

If you’re looking at buying a buy to let property it’s possible that off plan properties weren’t initially on your radar. Whilst it might be a few years before tenants are moved in and you’re receiving rent in the period between you securing a unit and the build completes property prices continue to move forward and it is highly likely that there will have been capital appreciation in that time.

We only propose property in areas that have the potential for strong capital growth ensuring our clients invest only in locations that are predicted to see impressive capital growth. In that time that the property is being built you’re increasing your capital position with very limited outgoings.

Why do you think this property is best for me and my situation?

An investment advisor who has proposed a particular property for you to invest in should be able to easily answer this question so it’s a good one to ask to confirm that a property is right for you.

Working as a trusted advisor to our clients we take pride in our work and happily answer questions regarding investment opportunities. Proposing only vetted properties built by the very best developers in the industry to protect our clients’ interests.

To discuss your plans for UK property investment please contact us on +44 (0) 2039507939 or send us an email at info@thirlmeredeacon.com. If this is your first time landing on Thirlmere Deacon Property Investments I encourage you to visit our homepage to read more about us and to see what we have on offer.

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