Property Investment in Planta: Risks and Benefits

Investing in property in the plant is an attractive alternative for many investors seeking to enter the real estate market with a more affordable initial cost and significant valuation potential.

Buying a property that is still under construction may offer profit opportunities, but it also involves risks that must be carefully evaluated before making the decision. In this article, we will explore the benefits and risks of investing in plant property, helping you make an informed and strategic decision.

What is Investing in Property in Planta?

Investing in property in the plan means buying a property that is still under construction, with the expectation that it will be delivered ready to move in in the near future.

This type of investment is attractive because of its lower initial cost compared to ready-made properties, in addition to offering the possibility of valuation during the construction period.

The property is purchased at a discount compared to the market price, and the investor can profit from the valuation of the property or from the passive income generated after delivery, if he chooses to rent it.

Benefits of Investing in Property in Planta

Investing in real estate in the plant can be an excellent option for those who want to obtain a good financial return in the long term. Let's detail the main benefits of this type of investment.

1. Lower Initial Cost

One of the main benefits of buying a property on the floor plan is the reduced price compared to properties ready to move in.

As the work is still in progress, the price of the property is generally more affordable, which makes this option attractive for investors who do not have the necessary capital to purchase a ready-made property.

Price discount: The properties on the floor plan are sold with discounts that can be up to 20% or more in relation to the market value of the finished property.
Facilitated payments: During the construction, payment can be paid in installments, with the possibility of starting to pay smaller installments before the delivery of the property.

2. Valuation Potential

Properties on the floor plan have significant valuation potential as the work progresses and the area surrounding the property develops.

This increase in value can be especially large if the property is located in growing areas, with new infrastructure projects, such as shopping centers, public transportation, or schools.

Valuation during construction: If the area where the property is being built begins to appreciate while the work is still in progress, the value of the property may increase considerably until it is delivered.
Infrastructure projects: The proximity to new shopping centers, parks or public transportation improvements can further boost the valuation of the property.

3. Facilitated Financing

When buying a property on the floor plan, you have the possibility of financing the purchase with different conditions, in addition to paying for the property in installments during the construction. This makes the investment more affordable, especially for investors who do not have the full amount needed to buy the property in cash.

Installment payment during construction: During the construction period, you can pay the installments in a phased manner, which facilitates cash flow.
Post-work financing: After the delivery of the property, you can finance the outstanding balance with interest rates that are generally lower than in financing for ready-made properties.

4. Lower Competition

Buying property on the floor plan may mean less competition compared to ready-to-live properties, which generally have a higher demand. This can allow you to choose properties in prime locations more easily and for lower prices.

Limited offer: As the property is still under construction, you have the opportunity to purchase a property in a strategic location before it is valued too much.
Exclusive launches: Some real estate launches on the floor plan are offered to selected investors or in pre-sale, guaranteeing more affordable prices before the official opening to the public.

Risks of Investing in Property in Planta

While investing in property on the floor plan offers great opportunities, there are also risks involved that must be carefully evaluated before deciding. Below, we address the main risks of this type of investment.

1. Risk of Construction Delays

One of the main risks when investing in real estate in the plan is the delay in delivering the work. The construction company may face unforeseen events during construction, which may result in delays in the delivery of the property. This can be a problem for investors who need the property ready for rent or resale.

Lack of clear deadlines: In many cases, delivery deadlines may not be met, which may result in a waste of time and, possibly, an opportunity for profit.
Delays due to economic crises or financial problems: If the construction company has financial difficulties or faces economic challenges, this can directly impact the construction schedule.

2. Property Devaluation Risk

Although properties in the plant have valuation potential, there is also a risk of devaluation.

If the real estate market experiences a slowdown, or if there are changes in economic conditions (such as rising interest rates or a financial crisis), the value of the property may fall, affecting your return on investment.

Changes in economic conditions: The real estate market is sensitive to economic fluctuations, and an increase in interest rates or an economic crisis can negatively affect the valuation of the property.
Devaluation of the area: If the region where the property is being built does not develop as expected or suffers a drop in demand, the property may devalue, impacting its profitability.

3. Problems with the Construction Company

Another risk to consider when investing in properties in the plan is the possibility that the construction company does not comply with quality standards or does not deliver the property as promised. This may include problems with the property's structure, finish, or documentation.

Quality problems: If the construction company uses low quality materials or does not comply with established standards, the property may have problems that affect its valuation or the experience of living in it.
Pending documentation: In some cases, the construction company may not regularize all of the property's documentation, which may cause complications for the buyer when trying to sell or rent the property in the future.

4. Reduced Liquidity

Properties on the floor plan are low in liquidity, meaning it can be difficult to sell them quickly if you need cash. You may have to wait for the work to complete and the property to be delivered to find a buyer or tenant.

Longer sale: Even after delivery, the property may not sell or rent as quickly as you expect, especially in saturated markets or with low demand.
It depends on the delivery of the work: The sale of a property on the floor plan depends on the completion of the work, and any delay may directly affect the liquidity of the investment.

How to Mitigate Risks When Investing in Real Estate in Planta

While investing in property in the plant offers risks, there are some strategies you can adopt to mitigate them:
Choose a trustworthy construction company: Check the construction company's track record and reputation. Make sure she has a good track record of delivering projects on time and within quality standards.
Search the location: Invest in areas with growth potential, but also in places with stable demand for rent or purchase.
Assess the local market: Follow real estate market trends in the region and consider factors that may impact valuation, such as new developments or infrastructure.