What you should consider before buying a home using off-plan method

Before investing in a property, one should visit the site and know the exact location of the property. [iStockphoto] Did you know that you can start your real estate investment journey without necessarily having to break the bank? This is very possible through the availability of different real estate investment options in the market, off-plan purchasing being one of them. Off-plan purchasing means investing in a property just before the developer breaks ground or at the initial stages of construction before it is completed. You put down a deposit and pay off the rest in instalments as construction continues. According to the 2023 Economic Survey by the Kenya National Bureau of Statistics (KNBS), the real estate sector contributed 10.1 per cent of the Gross Domestic Product (GDP) of the Kenyan economy as of the 2022 financial year. The sector is the second largest contributor to the GDP of the economy thus making it a lucrative market to invest in. Real estate investors can either purchase a completed property or buy it off-plan before it is built or completed. While both are good options to invest in the sector there are key considerations before buying an off-plan property. Dr Pesa is Charles Bett, the Superior Homes Kenya Senior Sales Executive. He shares some insights: Developer credibility This is important when purchasing an off-plan property. There have been multiple incidences of property scams with people losing money to developments that never kick off. Make sure that the firm you are looking to invest with has a proven track record and experience in real estate development. Find out how long the company has been in business and how many completed developments it has under its belt. In the age of the internet, it is easier to find information on developers through their websites and social media reviews left by both current and previous investors. It is also important to look at previously completed developments and check the ability to deliver within the agreed period. Building licenses and approvals Developers require different licenses and approvals before groundbreaking and eventually starting off the construction of a development. One should inquire about the existence of all the relevant licenses and ensure that the development meets the set standards and requirements before investing in it. In Kenya, developers need approvals from the National Construction Authority (NCA) and the National Environmental Authority (NEMA). They may also need to get approval from the Water Resource Management Authority (WRMA) when construction is next to a water catchment area and from the Kenya Civil Aviation Authority (KCAA) when constructing around public airports, airstrips, or military barracks airstrips. Location Before investing in a property, one should visit the site and know the exact location of the property. While most off-plan developments will specify where the development will be, the investor should get the exact details and ensure they are comfortable with the location before paying for it. This is especially important when investing in a property whose location will affect your commute or if you may need to relocate for work or your children's school. Sales agreement terms It is important to ensure you fully understand the investment you will make in an off-plan property. Most people fail to read the agreements laid out by the developer. One should seek the help of a lawyer to ensure the agreement is acceptable legally and does not have any loopholes or questionable statements. It is also important that before signing the agreement both parties ask all the questions regarding the engagement and agree on the terms laid out. This will help in avoiding any losses incurred or scams since all the scenarios will be outlined in the agreement including measures in case of losses or accidents. Payment options Different developers offer different payment options for their developments. As an investor, you should inquire about the payment arrangement in place before investing in an off-plan development. property. Payment options offered may include payment in instalments, through mortgages, or cash. It is important to also understand and seek clarification on when the instalments are due. These details should be laid out in the sales agreement as they will guide you when planning for your finances and picking one that suits you. Transparency and accountability The developer should be willing to divulge all crucial information that might help the client understand them better. This includes information pertaining to their projects. A credible developer will also be transparent with information on how your money is managed throughout the construction stages. You should receive regular updates either monthly or quarterly so you can see where every coin is going, and the quality of the work. It is therefore ultimately important to carry out your due diligence to know all the details of the property you would like to invest in. Where possible, you should conduct extensive research on the developers you want to invest with and understand the terms of the agreement. All investments incur risks that can be mitigated or avoided if prepared for and by understanding the full scope of the agreement.

What you should consider before buying a home using off-plan method

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