How To Buy Below Market Value (BMV)


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In the property investment sector, you often hear references to “buying properties below market value”, but the dilemma is that not everyone knows what to look for, or avoid, for that matter. The formula appears to be quite simple: buy the BMV properties that can make money and ignore the potential money-drainers. There is also another element: the below market value properties that other investors have simply missed.

“Below Market Value” Defined

The Royal Institute of Chartered Surveyors (RICS) defines market value as the estimated monetary total that a property is worth at the time a valuation takes place. Surveyors compare the property with others in the area and assess scarcity, demand, and transferability to come up with a price estimate. As an investor, you need to ask yourself how much you are willing to pay for a particular property and how much it could potentially make you.

Below are some tips to buy a property below market value.

Confirm That It Can Pay For Itself

Not all properties being offered for a below market value price are going to be wise investments. The price could be low for a reason. For example, you could easily acquire high-quality properties in rural parts of the UK, but low rent prices and lack of a large tenant pool may make it impossible to even cover the mortgage. Because a good investment should be able to pay its own way, confirm that any property you are looking at is going to keep the cash flowing in.

Carry Out Due Diligence

To get a good idea of a property’s potential, carry out your due diligence by visiting it in person and checking out the surrounding area. If you are unable to attend in person, send a trusted colleague or business partner and use a property app to confirm the prices of properties that have sold in the area.

Confirm that Rental Demand Exists

With no rental demand and no tenants, there is simply no profit to be had. Websites and apps such as Rightmove and Zoopla can give you a reasonable idea of whether or not rental demand exists in the area of any property that interests you. Check to see how many local properties are currently available for rent and how often adverts change. With too many properties, oversaturation is a risk and when listings don’t change on a regular basis, it could signal a lack of demand.

Consider Properties That Have Been Listed for Awhile

When a property has been on the market for a long time, the seller is more likely to be motivated. Any property that has not been viewed on a listings website or app for over a month will probably have a seller who is more receptive to lower offers. The longer the property is on the market the more it costs the owner, so you have some leverage in negotiating.

Avoid the Wrong Areas

Buying in the wrong area is a common mistake for first-time investors. Although many areas may have a reputation for being trendy and ‘up and coming’ thanks to planned investment in amenities and better transport, such plans can and do fall through. Locales with a bad reputation are best avoided for obvious reasons unless evidence exists that they represent a worthy investment.

Avoid Properties That Require Too Much Work

Before you make an offer, consider how much extra work a property will require before you can rent or resell it. If you have builder contacts who are willing to give you a deal, a property that needs some fixing up can be a great investment. Otherwise, consider the financial risks before deciding. BMV acquisitions can be a gamble, but if you find a distressed seller or overlooked property, a little due diligence can translate into a substantial future profit.

About Living Smart

At Living Smart we help investors achieve better returns on their capital through investment in lucrative property development projects. Our expertise lies in identifying opportunities, securing and maximising the correct planning consent and determining the best exit.

We are flexible in our approach and tailor our investment packages to the individual needs of investors. Please contact us for a free 30-minute consultation and the opportunity to meet us and take a tour of our current and completed projects.

About Living Smart

At Living Smart we help investors achieve better returns on their capital through investment in lucrative property development projects. Our expertise lies in identifying opportunities, securing and maximising the correct planning consent and determining the best exit.

We are flexible in our approach and tailor our investment packages to the individual needs of investors. Please contact us for a free 30-minute consultation and the opportunity to meet us and take a tour of our current and completed projects.

About The Author

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Ben Thorns

With a diverse background in digital marketing, property development, sales, and customer relationship management Ben handles recruitment, sourcing, sales, and lettings at Living Smart.

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