Buying Off-Plan

To purchase a property "off-plan" means simply to make a decision to buy a property before it is built. The buyer will rely purely on the architect's drawings, computer generated virtual tour, and the developer's reputation to base their decision to purchase. The benefit to the investor is that prices typically increase as the development progresses, and on larger sites there is a marked increase between each phase of the development.

You are likely to receive a discount when buying off-plan

Developers understand that if buyers cannot see a physical property at the beginning, they will demand a reduced price. Because developers are keen to offset the cost of the building works and need to secure their own financial position, a good start to the sales and marketing effort is essential. In all forms of retail, discounting has long been the most effective method of moving stock quickly; houses are no different.

There are substantial cash flow benefits to buying off-plan as most developers usually ask for stage payments to be made throughout the building process. You can therefore budget to meet each payment as it becomes due.

How to make money from Off-Plan Investment in Brazil

In most cases by the time the property is completed, the price would have increased due to market forces and the general appeal of a completely finished property and improved infrastructure. Depending on how the deal was structured, profits from off-plan deals can lead to a return on investment ranging from 30% to 300%.

When the property is built the investor still retains the option to complete the purchase, and benefit from a rental income or sell and realise the capital growth that has been achieved during the build.

Many off plan purchase contracts are 'assignable' meaning that you can sell (Flip) your property before it is completed.

Selling Before Completion - Flipping

Many off plan purchase contracts are 'assignable' meaning that you can sell (Flip) your property before it is completed. Using this strategy the investor only has to outlay the deposit rather than the full purchase price.

However, when using this investment strategy investor's need to act with caution - select carefully and to choose a location that property is likely to resell quickly, because even in the worst case scenario where the property cannot be sold upon completion, the final payment will have to be made, either by a lump sum or via a mortgage where applicable. Legal proceedings could be taken against the investor if he does not have the necessary means to pay the final balance.

A typical Off-Plan Scenario

The early bird catches the worm

The investor who looks to invest early is likely to be rewarded with the greatest returns. In Brazil, as in any other property market, it is important to buy as soon as possible during the early stages of development when prices remain very competitive but are already showing signs of early growth.

Only the best for me

By purchasing early an investor has the opportunity to choose the most desirable properties on any given development. The best units always offer higher capital growth in the smallest time frame and can often yield the greatest rental incomes. Beachfront Properties and Penthouses are often a very sound investment.

I can see it

In order to market a new development to a wider audience, a developer will build an interior designed show-home to give people an idea of what to expect. At this stage buyers do not have to solely rely on the architect's plan and the project becomes more desirable driving up prices in the process.

Price increase

Units sell faster when buyers are able to physically see them. As more units are sold, the price of the remaining units will rise. To the early investor this means that, should you decide to sell your property, it will be worth considerably more at this stage than when you made your initial purchase and paid the deposit.

Colordarcy will help you to develop a successful Off-Plan strategy

We have helped many investors to benefit and profit from off-plan property investment in Brazil. We carefully select the best developments, in the best locations, with the best re-sale potential. Our dedicated investment advisers will help you to choose the most appropriate strategy, one that will be in line with your personal goals and objectives. Click here to contact us.

Why not read:

• The purchase process in Brazil
• Brazilian hotspots - Bahia
• Frequently asked questions about Brazilian property