Below the market is a term that can apply to any investment but in this case it is real estate,
Below Market Value ( BMV) properties are fundamentally properties available at below the typical market rate at the time. How do normal properties get defined as BMV? The basic reasons are many but it could mean that the owner is facing some financial issues, personal life issues or the property is under threat of repossession. A more simpler reason could be that the property is being sold quickly to avoid any of the lengthy administration associated with selling a new home. One thing to be aware of is that BMV property does not constitute the property being defective or containing lower standards.
In general, the price of BMV property is lower than the “going” market rate or price. Usually the sale process is done via consultation with an agency that specialises in BMV. In nearly all of these property investment situations, each investor has to decide the price they wish to purchase. However, vendors have an initial set price for the property to begin with. It is up to potential investors to negotiate a selling price.
Advantages of Below Property Value Property Investments
The key benefits of any BMV property investment is the price of course. As an investor, an attractive price combined with a property that is resaleable or suitable for the rental market is a great opportunity to make healthy returns. Most properties can be valued somewhere 20%-40% below the market price for typical residential properties. That’s a big saving for investors to take advantage of when it comes to buying BMV property.
What to look out for when making a Below Property Value Property purchase
However, buying properties at discounted prices may come with some caution. Some sellers may be selling residential homes with defects or other hidden costs. Trying to buy affordable properties needs to be done with all the due diligence required as with any property purchase.
It is advised that investors look at each property, assuring they instruct a suitable brokerage to do the necessary homework and analysis. Examining the price growth, sales levels and statistics on property interest over a period of up to 12 months for fluctuations. Understand the market value of properties in the area to understand the correct rate set. Investors should also be ready to negotiate and be very organised in their approach. In most cases, be ready to hand over the full amount for the property (strictly no financing) once the sale is agreed. All BMV properties are passed over quickly and conveniently as possible.
Overall, buying BMV can be like purchasing any other property.
Agencies carefully do their own vetting of BMV properties. ONE Investments is no exception when it comes to producing transparent reports, before adding BMV properties to our portfolio and making said reports available for any interested parties.
Buying the right discounted property can be a lucrative way for any investor generating instant equity. A property investor could make thousands in return immediately on the right property.