There are ways to make money in the property market before a brick has even been laid. Buying off-plan presents profit opportunities for investors and homeowners alike. KERRY ANN EUSTICE looks at the pros and cons...

The fluctuating property market concerns everyone, whatever rung of the ladder they are on buying or selling, first-time purchaser or long-term investor, so an option which can guarantee a price seems a desirable option for all.

Buying off-plan, which means purchasing a home before it is even built, presents this ideal, offering the purchaser a contracted fixed price, dictated and reflected by the market and its rates at the current time. Sites are developed in stages, as and when, the developer has the money from buyers.

An initial deposit, to secure the construction of the home, is placed and a series of installments are usually set, to fund the duration of the build.

If the market is on the up and house prices rise, there is potential to make a sound profit and own a home worth much more than the price you paid.

This works both ways and there is a chance prices could fall, leaving the buyer at a loss and the developer with a substantial gain.

Current off-plan property hot spots include inland and coastal areas of Spain, the vibrant Dubai and Florida, as Mark Dawson of Bromley has found.

Mark bought off-plan in the US and set up a holiday rentals business (visit the website americandreamhome.co.uk for more details). He has experienced the off-plan process first hand.

He said: "The reason I bought off-plan was I didn't have the option of buying an established property, so had to look into the next stage of development which is an off-plan purchase. My motive for buying was as a long term investment in the place of a pension.

"I realise it's hard to be comfortable buying something which isn't there yet and the developers are always keen to convince you the market is rising, you have to be aware of this."

Mark has noticed a trend within property investment known as flipping or speculating, which is when an investor will place two or three deposits for off-plan homes and then, before the final payment is made, which is usually the largest, sell them on at maximum profit.

"This is quite a gamble as it is so dependent on a rising market," Mark says. "They are speculating and relying on finding a buyer.

"Off-plan is more secure for people who are buying the homes for themselves to live in, as by the time they decide to sell, the market may have changed.

"But investors are taking a gamble, especially if they play a speculative game."

If you are buying off-plan as a personal purchase, there are many more benefits.

Buyers are able to negotiate the decor by choosing the colours and the fittings, the layout by changing the location of internal walls and design features in essence allowing you to tailor make a bespoke home to your own needs and tastes.

There is also the option of picking a specific plot, this may include a south facing location or something bordering woodland or water. Attractive spaces will often have a Lot premium attached and will only be presented for sale when the market is operating to a developers advantage.

Off-plan checklist

  • Have a water tight contract drawn up by independent legal representation.
  • Ensure builders have a bank guarantee, which can compensate investors if things go wrong
  • Opt for an established developer offers peace of mind, as they can show previous builds.
  • Be aware the title deeds are often not drawn up in the buyers names until completion
  • Get legally binding guarantees covering the structure for five to ten years.