There has never been an easier time to discover below market value leads. Thus, you would expect that those seeking to invest in bmv property would be hailing this as the golden age of bmv. Unfortunately the sheer volume of property being marketed as below market value property, coupled with the number of channels for marketers to tell us about it all has become a bit overwhelming.
Twitter, Facebook, and LinkedIn, along with many other social media platforms (albeit less so than these) have become massively important to many businesses, including if not especially property businesses. According to many, the connections that such tools make possible between businesses and potential clients are simply unsurpassable by any other media the world has ever seen.
Right now there are millions of investors at every level conversing on these sites, some just conversing, others talking about investment deals, some even offering deals, and others still actively looking for help in finding deals -- not to mention those looking for partners. This at a time when there is more property below market value than at any time in the last 60 years.
Property auctions have never seen more stock coming and going at below market value, and most property auctions are now hosting their inventories online and even allowing potential buyers to pre-qualify (some make it mandatory).
So, in terms of what we all have at our fingertips, it is easier now to find below market value deals than it ever has been, but there is so much noise surrounding it all that it is nearly impossible to sort the wheat from the chaff, unless you know what you are looking for.
It's All About the Source, Pricing, and Homework
When it profiting from a bmv property investment, it is something that everyone should be able to do, everyone thinks they can/could do but really only a handful succeed. In order to profit from bmv investment you need to do a massive amount of research.
There are dozens of people across the social sphere purporting to be BMV sourcers, but only a handful of them delivering. So, first there is the research on the source; are they who they say they are, do they have an established record in the industry, or just a criminal one, is it worth my time researching/visiting any properties put forth by this person/source.
All you are looking for is someone trustworthy who isn't wasting your time, because you will be doing your own research to assess whether the property is really below market value, and therefore a good investment.
Researching a BMV Property
How much work does it need (maybe you have a builder-mate), how much rent will someone pay for that "mid-sized" room at the rear, why is it really so cheap? And many more questions like these will need to be answered in researching a BMV property.
A property that is £40k 33% below market value, but that needs £50k worth of renovation to make it liveable is not a deal worth taking the risk on. Even though it should still net a profit when the work is carried out, there are a great deal of things that can go wrong with that size of job, and a 50k renovation can easily become £70k or even £80k. Properties needing such a huge amount of work are usually only taken on by builders or those who have a great knowledge of the trade.
But in the example given above you can clearly see where your BMV could easily become FMP (Fair Market Price) by the time you come to making your profit. With most bmv properties it is much less clear cut, and assessing the amount of potential profit comes down to your assessment of a property's true market value.
The best way (and this is a bit naughty) is to phone round the local agents and say that you are about to be left a house in a will that you plan to sell, and describe the house, giving a nearby address. This is the best way in torrid market times, because agents will often give lower prices to sellers than to buyers.
But this price might be overly pessimistic. So you should do other research to find out what prices similar homes in the area are selling and renting for. In the UK you have the Land Registry, which lets you input postcodes and find out exact sale prices for homes broken down by size and a host of other factors.
If you can take somewhere in the middle of the agents estimates for selling prices, and sale prices of other properties in the area, minus the estimate for how much work needs done, and still find yourself at 20% higher than what the current seller is asking, then you could just be onto a winner.
*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.