Why invest 'off-plan'?

This simply means buying a property from builders plans and is a very popular form of investment. The greatest capital growth can be during the construction period (around 30% per annum currently).

'Off-plan' purchase is a successful investment because:

1. Your property is priced below today's market value.
2. Your equity is limited to only 20-30% of the purchase price while you get growth on the full value.
3. You can sell the property during construction.

As an example:

A property is available for £100000.
Your deposit is 20% (£20000).
The remaining 80% only needs to be paid on delivery of the property - you do not need to pay this if you sell before completion.
The property value increases to £140000 during the 2 year build.
You sell for £140000 - you have made a gross profit of £40000 on an investment of £20000. (Still a huge profit even after legal fees, tax and sellers commission have been deducted.)

In Spain, the developers Bank usually provides a non-status mortgage for the balance remaining at completion should you decide to keep the property (on very good rates) - which means all you need to budget for is the deposit. Ongoing rental income should then cover costs and produce a profit