As a real estate investor in Nigeria, you may be undecided about whether to invest in off plan properties or ready to move properties, especially as a beginner. You’ll like to know which of both options offers you better prospects, security of investments, lesser risks, and higher returns. In reality, each option has its own advantages and disadvantages.
In this article, we compare and contrast the merits and demerits of investing in off plan properties and ready to move properties in Nigeria and determine which of both options offers you a greater advantage.
Advantages of Off Plan Properties
Off plan real estate refers to properties that haven’t been completed or even constructed. Such properties are often directly accessible from developers and typically available at a cheaper rate compared to finished properties. As the investor, you can then sign a contract with the developer to procure the property at a predetermined price, and the property is then completed within a specified timeframe.
Some of the benefits of this type of real estate investment include:
- Potential for Capital Appreciation: Investing in off plan properties allows you to purchase them at a lower price than completed properties. As the development progresses, you can expect the value of the property to increase, thus providing the potential for significant capital appreciation upon completion.
- Customization and Modern Features: With off-plan properties, you can customize the design and finishes according to your taste, budget, and preferences. Additionally, developers often incorporate modern amenities and technologies, making off plan properties more appealing to potential tenants or buyers.
- Payment Flexibility: Developers of off-plan properties typically offer flexible payment plans, such as installment payments, which can make it easier for you and other prospective investors to manage their finances. This flexibility can be particularly beneficial for investors who have limited upfront capital.
Disadvantages of Off Plan Properties
While off plan real estate assets offer numerous advantages, there can also be risks and challenges that come with the investment option. Some of them include:
- Construction Delays and Risks: Investing in off-plan properties comes with the risk of construction delays, which can alter the expected completion timeline. Unforeseen difficulties, regulatory problems, or economic downturns are a few examples of factors that can cause delays. Hence, you, as the investor, should be prepared for potential delays and adjust your investment timelines accordingly.
- Uncertainty in the Final Outcome: Since you can procure off plan properties based on architectural plans and promises made by developers, such investments come with some level of uncertainty regarding the final outcome. It’s possible that the finished property may not fully match your initial expectations.
- Market Fluctuations: Real estate markets can be subject to fluctuations, and investing in off-plan properties carries the risk of market uncertainties. In essence, changes in market conditions or economic factors can influence the demand and value of the property upon completion, whether positively or otherwise.
Advantages of Ready to Move Properties
Ready to move properties refer to structures that have been completed and are ready to be occupied. As opposed to off plan assets, ready to move properties may be acquired as-is with an outright payment and rented out for lease.
Some advantages of ready-to-move real estate properties include the following:
- Immediate Rental Income: Investing in ready to move properties allows you to start generating rental income immediately after the purchase. This is particularly beneficial for investors who desire steady cash flow from their investments.
- Reduced Risk and Certainty: Ready to move properties offer a clearer picture of what returns your investments will yield. There are no surprises, hidden costs, or uncertainties regarding the final outcome since the property is already completed and can be thoroughly inspected before you decide to acquire it.
- Potential for Quick Returns: With a ready to move property, you have the option to sell the property quickly should you decide to liquidate your investment in the future for any reason. This provides the potential for a faster return on investment for you as opposed to waiting for the completion of off-plan property.
Disadvantages of Ready to Move Properties
While the advantages of ready to move properties may look attractive and compelling enough for a newbie investor, they’re not entirely free of pitfalls and challenges. Such challenging factors include the following:
- Higher Purchase Price: It goes without saying that ready-to-move properties generally cost more to acquire than off-plan properties. The convenience and immediate availability come at a higher rate, which may require you to have a more considerable upfront capital.
- Limited Customization Options: Unlike off plan properties, ready to move properties have limited customization options. You may need to accept the existing design, finishes, and features of the property without the ability to personalize or adjust them.
- Older Infrastructure and Facilities: Ready to move properties may come with older, outdated infrastructure and facilities compared to newly constructed off-plan properties, which may have newer, cutting-edge facilities. As an investor, you may need to consider the potential costs of maintenance and renovations to keep the property competitive in the market.
In summary, choosing to invest in either off plan or ready to move properties in Nigeria has its own advantages and disadvantages. Ultimately, there is no one-size-fits-all approach, and the choice between off plan and ready to move properties will depend on your preferences and investment objectives. That’s why you need to study and understand the merits and demerits of each investment option in order to make informed decisions that align with your investment goals and risk appetite.
So, when you need to decide between off plan and ready to move properties, you should carefully consider your investment goals, risk tolerance, market trends, the credibility of developers, and financial capabilities.
Off plan properties may be suitable for investors looking for long-term capital appreciation and customization options, while ready to move properties are more suitable for investors seeking immediate rental income and reduced risks. By carefully evaluating the factors we’ve discussed, you can successfully navigate the Nigerian real estate market and maximize your returns with fewer risks.