Saad 
Would you consider investing in a Harford County rental property without first viewing it?
If yes, you are one of many investors who appreciate buying a brand-new, unfinished rental home. While being the first to buy a house that never has been lived in is interesting and has many advantages, there are dangers associated with investing hard-earned money in something that has yet to be completed.
If you’re thinking about buying an off-the-plan property in Harford County, keep reading to learn about the most typical benefits and hazards of this sort of investment.
What Exactly Does Off-the-Plan Investing Mean?
Essentially, investing in an off-the-plan property for rent is buying it before it is built. Typically, you sign an agreement with a home developer to purchase a property that might not be finished for months or even years, depending on the condition of the neighborhood in which the property is located.
The procedure of purchasing an off-the-plan house is straightforward. You will frequently get digital pictures of the property, examine scaled models, and even visit real-life showrooms to get a sense of what your off-the-plan house will look like once completed. From there, you make your selection based on the property’s plans, location, and anticipated finishing touches.
The Benefits of Buying an Off-the-Plan Harford County Property
There are many perks to investing in an off-the-plan property, especially in the growing Harford County region.
Price Locks
One of the biggest advantages of buying an off-plan property is the price lock you will enjoy. Though your property will not be finished until a future date (when appreciation and market growth may call for higher housing prices), you are locked into the current market price at the time of purchase. This equals the potential for significant savings and higher positive cash flow when you lease your rental to tenants.
Discounted Purchase Prices
In addition to benefiting from current market prices, developers often offer off-the-plan properties at discounted rates with additional incentives to secure the finances needed to finish building the community. It is important to research your investment decisions thoroughly to ensure you get a great deal.
Buy Now and Pay Later
The process for investing in an off-the-plan property usually involves paying a 10% deposit to the developer, securing your purchase. The remaining balance is typically due upon completion of the development, which can vary between 12 months and 5 years.
Customization Options
Investing in a Harford County rental property that has yet to be built often allows for more flexibility in choosing flooring, fittings, and finishes. While these extras do cost more, they ensure your rental will have the exact appeal you want to attract top-notch tenants upon completion.
The Risks of Buying an Off-the-Plan Harford County Property
While the benefits are enticing, there are definitive risks to buying an off-the-plan rental home.
A Falling Market
If anyone could have foreseen the American housing bubble burst in the mid-2000s, no one would have risked purchasing an off-the-plan property. A falling market could mean that the purchase price you locked in becomes an overpayment by the time your investment property is complete, making it difficult to secure financing for the remaining amount owed.
Failed Expectations
Many developers do not allow property owners to view their purchased properties until the entire project is completed. This increases the risk that the final product will not meet your expectations, and you may be disappointed with the quality of workmanship. Unfortunately, once you have invested in the property, you are stuck unless you invest more money to fix these issues.
Financing Issues
Home loan pre-approvals are usually valid for only 3-6 months. It’s important to renew your pre-approval periodically during construction to avoid financing issues when the remaining balance is due. Lender policies frequently change, which may hinder your ability to renew pre-approval throughout the construction period. Regular meetings with your lender can help offset some financial risks, but cannot guarantee complete protection against a loss of financing.
Builder Bust
Though unlikely, investing in an off-the-plan property always carries the risk of the developer going bankrupt before completing the development. It is vital to discuss what measures will be taken if the developer goes bankrupt or halts construction. This may include guarantees from the developer and whether you will get your deposit back should the project fail.
Conclusion
There are many pros and cons to buying a Harford County rental property off-the-plan. While purchasing a never-lived-in property can be exciting, it is important to weigh the risks when it comes to paying for a property that is not yet built.
If you find yourself in the Harford County area with a completed off-the-plan property that suits your rental business, consider contacting Alna Real Estate to help manage your property. With extensive experience in the rental property industry, Alna Real Estate provides exceptional property management services, including tenant screening, lease drafting, regular inspections, and more.
If you want to purchase a property off-the-plan and have someone else handle all property management tasks, contact Alna Real Estate today.
