How to Begin a Below Market Value Property Investment
Parmdeep Vadesha
October 29, 2008
First of all, why are properties sold below market value? While it may seem strange at first to sell a property for a price below what it is worth, keep in mind that there are reasons for selling below market value. Properties are put up for sale below market for different reasons, and it is usually the seller’s motives that determine the price.
Many below market value properties are repossessions. With the current economic slump we are facing today, many homeowners who took out a loan using their homes as collateral are finding it difficult to repay their mortgages. Thus their homes get repossessed by the creditor bank or loan provider. The banks are not in the business of property investment so their main goal is to regain their capital by selling the property quickly. Selling fast usually necessitates pricing the property below market value. As a property investor, here is where you can get the most value for your money.
Auctions are a good place to look for repossessed properties sold at bargain prices. Many auction houses have a portfolio of repossessed properties. But buying an investment property at an auction is not as easy as raising your paddle. You need to do some preliminary homework and some careful research if you do not want to end up with a deadweight or a worthless investment. The key to success at a property auction is to purchase the property you want at a price that you can reasonably afford.
To get started, look for an auction house and browse through their portfolio of properties. On my website you will find a comprehensive directory that lists all the major UK property auction houses – visit their websites to browse upcoming auction properties. Once you have chosen the property you are interested in bidding on, do some research to determine if it is the type of property that you really want to buy. For example, you can find out if it is indeed priced below market value by looking at the prices of similar properties in the area where it’s situated. Your maximum price should be below the going rates of these properties.
It’s also a wise idea to have the property inspected. There could be some hidden defects that a novice in property investment might not notice. Make sure to list down all issues and potential problem areas – both the cosmetic and the concealed. These factors help determine your asking price and can also be your bargaining chip in negotiating for a lower price.
Now that you have the basics down pat, it is high time to begin your journey towards successful property investment. Make buying below market value your mantra and you will definitely see profits and success in the near future.
Many below market value properties are repossessions. With the current economic slump we are facing today, many homeowners who took out a loan using their homes as collateral are finding it difficult to repay their mortgages. Thus their homes get repossessed by the creditor bank or loan provider. The banks are not in the business of property investment so their main goal is to regain their capital by selling the property quickly. Selling fast usually necessitates pricing the property below market value. As a property investor, here is where you can get the most value for your money.
Auctions are a good place to look for repossessed properties sold at bargain prices. Many auction houses have a portfolio of repossessed properties. But buying an investment property at an auction is not as easy as raising your paddle. You need to do some preliminary homework and some careful research if you do not want to end up with a deadweight or a worthless investment. The key to success at a property auction is to purchase the property you want at a price that you can reasonably afford.
To get started, look for an auction house and browse through their portfolio of properties. On my website you will find a comprehensive directory that lists all the major UK property auction houses – visit their websites to browse upcoming auction properties. Once you have chosen the property you are interested in bidding on, do some research to determine if it is the type of property that you really want to buy. For example, you can find out if it is indeed priced below market value by looking at the prices of similar properties in the area where it’s situated. Your maximum price should be below the going rates of these properties.
It’s also a wise idea to have the property inspected. There could be some hidden defects that a novice in property investment might not notice. Make sure to list down all issues and potential problem areas – both the cosmetic and the concealed. These factors help determine your asking price and can also be your bargaining chip in negotiating for a lower price.
Now that you have the basics down pat, it is high time to begin your journey towards successful property investment. Make buying below market value your mantra and you will definitely see profits and success in the near future.