Here are the reasons why buying off-plan property investment is the most risky investment in Nigeria: First, you have no legal ownership of the land even though you have paid for it. This gives a loophole for the developers to renege on their word and return your money.
Buying off-plan property investment is the most risky investment in Nigeria. However, all investments involve some risk. For example, stock market involves risks of losing you investment if the company faces a crisis. Paying rent for a house involves risks of not getting your money’s worth when something breaks in your house. Therefore, it is important to understand the implication and level of risk involved in an investment before you buy it.
Off-plan property investments are the most risky properties in Nigeria because they are the least evaluated. Therefore, investors are not sure if there is any property existing in addition to a design. In some cases none was built.
Many people understand the benefits of buying a property in Nigeria and you may also have heard about the benefits of buying off-plan. But did you know that risk is inherent in buying off-plan and it’s the most risky investment in Nigeria?
Those who buy off-plan property investments are usually blinded by the prospect of earning very large sums of money. They tend to make quick and often reckless decisions hence increasing the risks associated with such decision. Such individuals fail to understand some crucial facts about off-plan properties, namely that the choice of location of the actual project is final, that projects take time and often go over budget (which means additional financial resources are required to complete a project) and that builders may have gone out of business when the time for possession arrives (which means you do not actually own a property but a share in an uncompleted project).
Investing in real estate is popular. You see infomercials. You read billboards. Sometimes you even read it in the papers… But why are these investment opportunities usually “off-plan” and overpriced? Why doesn’t your real estate agent have photos of the actual property and an address where you can find it? And who are the “brokers” anyway, and what do they have to do with anything? And why should you be wary of real estate certs that promise a “guaranteed return”?
This article is written to inform and educate aspiring investors, real estate practitioners and the general public on the major risk factors involved in buying off-plan property investments in Nigeria.
Buying off-plan property in Nigeria is one of the most risky investments you can make, mainly because, by the time you get the property and moves into it, the price would have gone up and your capital will be at risk. Not to mention, there are also chances that you could be scammed.
Buying off-plan property investment can be risky and uncontrollable. For example, the developer could go out of business while the building is being constructed; they could also run into drug use problems with their employees that have the ability to affect job performance and construction of the property. On top of this, when you buy off-plan, you don’t get to inspect the property first unless the developer offers that service. It’s hard enough to know if something is a good investment when you are able to do your own inspection on the property but it is even harder when you take all those risks into account.
We were once in your shoes! At some point, you will probably consider investing in off-plan property. And when that time comes and also after analyzing the benefits and risks of this investment, you will probably tell yourselves: why buy off-plan property? Let’s explain
Technically, an off-plan property is a unit which has been bought before it has been constructed. This means that you have thrown money at a mere patch of land and nothing more, but are promised a luxurious accommodation/unit when the development is complete. The issue with this is that most developers do not keep to the initial promise made and deliver what they promised. This is why before you buy off-plan; you must take into account the following issues:
If you want to place your money in real estate and make a reasonable return on investment, it will be advisable that you go off-plan. However, a lot of buyers end up making mistakes. Here are some of them: Not doing enough background checks into the developer, selecting the wrong location and more.
Buy-to-let investors were given a new lease of life when they were allowed to deduct the interest paid on their mortgages from their taxable income. This was a great incentive for many who had been sitting on the fence about investing in property due to the perceived risks involved. Rather than actually buying to let, many homeowners now choose to rent out their property and use the money from renting it out to subsidize their mortgage payments.