Not many investors know about buying property below the market price says estate agents in Aylesbury because they are simply not sure what to look for and what to avoid. To make things simple, we have divided below market value properties into two types-
- One which can help investors make money and reap profit.
- One which has been ignored because it will drain all your money.
It is obvious that you should stay away from the second type of BMV property although it is easy to get drawn towards buying something cheap. But in the long term, it will cost you more of your time, money, and effort than it is truly worth.
When we talk about BMV property, you would like to find those properties that investors have missed out on and not ignored. There are several properties that fall under less observant investor’s radars. These properties are prime and ready for investors to make good profits from them.
According to the Royal Institute of Chartered Surveyors (RICS), the definition of market value is an estimated amount of money at which a property must be exchanged. It has to be done when the valuation takes place between an owner who is willing to sell the property and a buyer who wishes to purchase the same property. The transaction can only take place after the property is marketed and the involved parties act after gathering knowledge and information rather than under any compulsion.
Here are some of the top ways to buy property below market value:
1. Ensure that it is a cash-flowing property
Not every property that is being sold or is buyable at a price that is lesser than the current market price will turn out to be a great investment. Some properties are cheap because there is a reason for it!
Let’s take an example- it is quite easy to find properties that are less costly and yet are of good quality in various rural parts of the UK. Such properties might be having the best views and enchanting designs and yet the chances of you being able to sell them or rent them are highly unlikely. There is a lack of a good number of tenants or the rent prices are so low that you cannot cover the mortgage, it would not be a good investment.
Whenever you are choosing a property for investment, it must pay for itself and hence you need to consider before investing in the property whether it is going to be a cash-flowing one or there should be a valid reason behind why it is not.
2. Do not neglect due diligence when you are searching for below market value property
It is highly risky to invest in property that does not have evidence of its profitable avenue. Your purchase will be solely based on gut instinct. To ensure that you avoid this situation, do your due diligence and visit the property. Check out the neighbourhood and if you are unable to visit the property yourself, ask a business partner or peer to visit for you- someone who you can trust. Make use of the property app and tally the price of properties sold recently in the same postal code in the past few years. Also, check the rent of different properties in the same area and before committing to any contract, consider taking help from a solicitor.
Ensure that there is rental demand for the property
If there is no rental demand, there will be no tenants. And no tenants means no rent, no money. This would turn out to be similar to a black hole where your investment will get lost.
One of the ways to get an idea of the rental demand is to check out the entire area of the property similar to the property which you want to buy. One can also use websites along with apps to monitor a few aspects such as checking out the number of properties that are available for rent at present, and how frequently the advertisements disappear followed by new ones. If there are too many properties available, it could be a sign of oversaturation and a lack of change in the listings reflect lesser proper demand.
Look for motivated sellers who are willing to sell their property
Properties that have been on sale in the market for quite some time are most probably to have genuinely motivated sellers. So always look for the longest posted properties first. Properties which have not received any views on a website or any property listing app for more than a month have more chances of having low offers. Whenever you have a keen or desperate seller, you get a lot of leverage over the situation.
In a nutshell,
Many people will argue that there is no way to buy below market value property. But in this blog, we have listed practical ways of finding and evaluating BMV properties. We hope these insights will help you make good investments.