A First Timer´s Guide to Below Market Value Property Investments
Parmdeep Vadesha
November 12, 2008
How do you profit from property investments? You can buy a flat in London and watch its value go up by around 6% per year. Should you decide to sell it again the next year, you can only increase the price by 6%. By that time, it will be as if you´re selling only to cover the costs. It might not be worth the hassle.
The key to success and profits in property investments lies in how cheap you buy the property, not just in how high you sell it for. Here now comes below market value property investments. With below market value (BMV) properties, you purchase said property already at a discount, say 20% off its market price. The low buying price already gives you the lead from the first day up to the time you decide to resell it. Definitely a better option, is it not?
You may then ask this question: Why are properties sold below market value? It may seem strange to note why properties are being sold for prices below what they´re worth even in the midst of the stabilisation of property prices in many parts of the UK. The answer to this lies in the reason why these properties are being put up for sale in the first place.
Properties come into the market all the time and for a host of different reasons. For one, repossessed properties are almost always sold below market value, granting the fact that the mortgage company or loan provider wants a quick sale to immediately regain the cash it invested. These lenders are under obligation to sell the repossessed properties at reasonable prices or risk being sued by their former borrowers. They usually turn over the properties to auction houses which may then put them up for sale at 30% below market value.
In today´s day and age, property investors have to be wise in making the decision on where to place their money to enjoy the best returns. Definitely one of the best areas of property investment is the acquisition of properties below their market value. Still buying a house or a property for investment is still a big decision.
To determine the value, talk to the people around the neighbourhood of your potential property. The locals are usually good sources of information and can provide you with what you need to know about the local market. Be sure that the price you´re buying your property for is lower than the going rate. Neighbours are typically privy to some insider information such as the real reason why the previous owner is selling the property.
Finally, make a reasonable offer. Even if property is sold below market value, you still want to name a credible price so the seller will take you seriously. Take into consideration the repairs that need to be done and the expenses that you expect to make. With these as bargaining chips, you will surely be able to purchase that property at below market value.
The key to success and profits in property investments lies in how cheap you buy the property, not just in how high you sell it for. Here now comes below market value property investments. With below market value (BMV) properties, you purchase said property already at a discount, say 20% off its market price. The low buying price already gives you the lead from the first day up to the time you decide to resell it. Definitely a better option, is it not?
You may then ask this question: Why are properties sold below market value? It may seem strange to note why properties are being sold for prices below what they´re worth even in the midst of the stabilisation of property prices in many parts of the UK. The answer to this lies in the reason why these properties are being put up for sale in the first place.
Properties come into the market all the time and for a host of different reasons. For one, repossessed properties are almost always sold below market value, granting the fact that the mortgage company or loan provider wants a quick sale to immediately regain the cash it invested. These lenders are under obligation to sell the repossessed properties at reasonable prices or risk being sued by their former borrowers. They usually turn over the properties to auction houses which may then put them up for sale at 30% below market value.
In today´s day and age, property investors have to be wise in making the decision on where to place their money to enjoy the best returns. Definitely one of the best areas of property investment is the acquisition of properties below their market value. Still buying a house or a property for investment is still a big decision.
To determine the value, talk to the people around the neighbourhood of your potential property. The locals are usually good sources of information and can provide you with what you need to know about the local market. Be sure that the price you´re buying your property for is lower than the going rate. Neighbours are typically privy to some insider information such as the real reason why the previous owner is selling the property.
Finally, make a reasonable offer. Even if property is sold below market value, you still want to name a credible price so the seller will take you seriously. Take into consideration the repairs that need to be done and the expenses that you expect to make. With these as bargaining chips, you will surely be able to purchase that property at below market value.
Print
Email
