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Can you give me an example of investment return on an off plan property?Consider the following example:- An apartment purchased off plan for £100,000 with a scheduled completion date in 24 months time. NB. It is important to remember that this will be the developers “incentive price” to encourage take up of the off plan project and in all probability it would have a current value in the region of £120,000 to £130,000 were it available as a completed property. Initial deposit = £30,000 plus costs of approximately £3000 = Total £33,000 In order to predict the likely future value of the property there are 3 factors to take into consideration:- 1 The property was purchased at approximately 15 to 30% under the realistic market value 2 As the project develops over time the developers will phase in price increases 3 The historic growth rate of Spanish property values in excess of 15% per annum For the purposes of this example we will assume a very conservative growth rate of 20% per annum. Therefore the property would have a market value of:- £120,000 at the end of year one £144,000 at the end of year two So as an investment, the initial £30,000 deposit would yield a profit of:- £20,000 in year one representing a 66% profit on investment (166% ROI) Or The same £30,000 would yield a £44,000 profit in 2 years representing a 146% profit on investment (246% ROI) The construction project is completed after the 2 year period in our example and there are two options open to the investor in order to secure the return on investment. The first option is suitable for investors looking to secure a short term return and the second option is suitable for those investors looking to take a longer term view. Fully comprehensive details about the strategies that are now available to you in order to realise the profit are contained within the guide. 2 Retain Through To Legal Completion Index Page - IPS Guide Index page Page 11
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