As the demand for high quality city-centered houses increase throughout Nigeria, the amount of Off plan development continues to rise in order to keep up and prepare for the future.

What is Off plan investment

It is buying a property that is in the construction or planning phase and has not been completed yet.
In some instance the potential investor will not be able to see live structure before investing in the property.

How investors make money with Off plan

There are 2 primary ways in which you can make money from Off plan property.

1) Buying and hold
This entails an investor holding onto their investment for a longer term and seeing the discount gained as a bonus.

This is how it works
Let's say you eventually get a 20%. Off plan discount. This can be treated as money you can use to invest in something else.

In a rising real estate market, where prices are always going up, price discount gained can be upwards 50% by the time construction has actually finished.
This strategy is highly recommended for investors who are new to Off plan investment.

2) Selling before completed

Investing in Off plan means you making an initial deposit for the property, the rest is often payable when it's completed or on installment.

This is how it works

You buy an off plan property for 60 million Naira, putting down an initial deposit of 3 million Naira which is (5%).

As demand increases, 6 months down the line, properties in the neighbourhood rise by 5% meaning the house that still under construction which will worth 63 million Naira upond completion.
You may be able to find a buyer looking for home to live or an investor willing to pay you for the right to buy the Off plan property. For instance, they may offer 6 million Naira for the right to buy the property at 60 million Naira upond completion.
You have actually sold the property for 3 million Naira profit: a 100% return on your investment. This strategy is extremely popular for development in prime locations. It is one the strategy use buy well experienced investors.

In the next post we will discuss the benefits and risks of investing in Off-plan Properties


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