Well selected bmv (below market value) property provides maximum returns to investors wishing to lock in extra value to their purchases, as part of a carefully planned strategy, be it a Buy to Let, redevelopment or other medium to long term investment option.
The UK has suffered its fair share in the economic downturn and, as a result, offers potentially lucrative investment opportunities to cash buyers who select underpriced, so-called distressed properties in the right location. Indeed, the old adage: location, location, location remains as true for bmv property hotspots as it does for market priced properties in hotspot locations. The fact that the seller needs to sell fast, at below market value, is not in itself a guarantee to investment success. Bmv property only adds extra value to potential returns on investment if it is priced in the right location.
Often bmv investment property is used to generate ongoing buy-to-let income and/or longer term returns. Again, the property will need to be situated in a desirable location; one that has a relatively high level of employment, as well as adequate services in terms of local amenities, transport links, schools, a hospital etc. Without these, the bmv investment will be difficult to rent or sell and, over time, the investor is likely to lose the extra capital they hoped to gain from buying property below market value in the first place.
Shrewd investors in bmv properties seek out markets that offer the greatest probability for growth, thereby further increasing their potential returns. Many bmv properties are poorly located and in deprived areas where unemployment has caused mortgage defaults and the market has dropped dramatically without any signs of recovery.
It is therefore important to understand just what market drivers are in place in a particular area to offer the growth required for investment success. For example, strong signs indicating a budding bmv investment property hotspot are infrastructural improvements still in the early stages of completion. These could be in the form of local attractions, industrial parks, services, amenities, roads, airports with increased international flight services, or the re-location of corporate entities that bring employment to the area. All indicate imminent prosperity through increased activity within the locality, in turn creating the demand required to boost the local property market over time.
Aside from contacting town halls to ascertain what plans, if any, have been made for the neighbourhood in which you are considering your bmv investment, you could try using one of the search engines like Google to conduct some more research. Type in a search phrase such as “Regeneration in X town” and you could be alerted to big plans for the town – a clear prompt to look in X town for your below market value property.
*This page is provided for information purposes only and should not be construed as offering advice. IPIN is not licensed to give financial advice and all information provided by IPIN regarding real estate should never be treated as specific advice or regulations. This is standard practice with property investment companies as the purchase of property as an investment is not regulated by the UK or other Financial Services Authorities.