Creating Win-Win Situations by Buying Below Market Value
Parmdeep Vadesha
October 02, 2008
You probably know that the best way to succeed and profit at property investment is to always buy below market value. However, this golden rule is often easier said than done. The truth is that everybody knows that the key to success is buying below market value but only a handful of investors truly do this in practice. To achieve long term success in the property business, you have to be able to consistently acquire properties below market value. Most of the time, this means buying from distressed or motivated sellers who are willing to part with their property for a cheap price. Many property investors have built a fortune following this strategy – and hopefully you will, too.
Most people traditionally consider buying distressed properties as profiting from the misfortune of others. This is not the case. Motivated sellers – usually those undergoing a divorce, facing repossession, moving to a different country – want to get rid of their problem properties right away. As a property investor, you can create a win-win situation in the purchase of a distressed property that leaves both you and the seller happy with the deal.
Consider this scenario. A couple in the midst of a bitter divorce wants a fast and easy way to let go of a property they bought in 1998 for £100,000. Today, a decade later, the property is now worth over £200,000. Yet, the warring spouses are willing to sell it to you for £165,000. As an investor, this is a good bargain for you and one property that you would definitely want to buy.
However, you may also wonder why the couple was willing to sell their property for a price very much less than the current market value. Keep in mind that the couple wants to move on with their lives quickly, and even though you may not see it as a bargain, they do. They would remember the time when they bought the property for just £100,000. Therefore, they will still be pleased with the fact that they have gained a £65,000 profit from the deal. Isn´t this a win-win situation for both parties?
In this case, both parties are happy and the property investor can hardly be viewed as the bad guy. By providing a service to the distressed property owner, the investor has relieved him of his predicament and leaving him now financially better off. The property has been sold for a price that is reasonable for both parties and at a speed that is faster than what it would take the average home buyer. In this case, both parties profit – the property investor and the seller.
The property investor can think of himself as the problem solver. He operates his property investment by meeting the needs of people who want to quickly sell their properties. Thus, by providing a specialised service, he creates situations where all concerned benefit. Buying below market value to turn into a property investment is not ripping people off. This is an investment strategy that you can make use of with a clear conscience.
Most people traditionally consider buying distressed properties as profiting from the misfortune of others. This is not the case. Motivated sellers – usually those undergoing a divorce, facing repossession, moving to a different country – want to get rid of their problem properties right away. As a property investor, you can create a win-win situation in the purchase of a distressed property that leaves both you and the seller happy with the deal.
Consider this scenario. A couple in the midst of a bitter divorce wants a fast and easy way to let go of a property they bought in 1998 for £100,000. Today, a decade later, the property is now worth over £200,000. Yet, the warring spouses are willing to sell it to you for £165,000. As an investor, this is a good bargain for you and one property that you would definitely want to buy.
However, you may also wonder why the couple was willing to sell their property for a price very much less than the current market value. Keep in mind that the couple wants to move on with their lives quickly, and even though you may not see it as a bargain, they do. They would remember the time when they bought the property for just £100,000. Therefore, they will still be pleased with the fact that they have gained a £65,000 profit from the deal. Isn´t this a win-win situation for both parties?
In this case, both parties are happy and the property investor can hardly be viewed as the bad guy. By providing a service to the distressed property owner, the investor has relieved him of his predicament and leaving him now financially better off. The property has been sold for a price that is reasonable for both parties and at a speed that is faster than what it would take the average home buyer. In this case, both parties profit – the property investor and the seller.
The property investor can think of himself as the problem solver. He operates his property investment by meeting the needs of people who want to quickly sell their properties. Thus, by providing a specialised service, he creates situations where all concerned benefit. Buying below market value to turn into a property investment is not ripping people off. This is an investment strategy that you can make use of with a clear conscience.
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