Two kinds of BMV properties exist:
- Ones that can generate money and make you profit
- The other type is completely useless as it drains money
You should never buy the second type of BMV property. Instead, you should go looking for a BMV property that other investors have skipped. Usually, investors who are not so observant cannot locate these properties. These BMV properties are ready to be snatched up and turned into a profit-making machine.
Before we get into the details of this profit-generating machine, what does “BMV” mean?
What are BMV properties?
Before we get into the details of purchasing a BMV property, let’s discuss what it is. It is the same as any other residential property, except that it is being put up in the market at a price lower than the current market. Therefore, for investors, these properties are a gold mine.
The main reason why investors, especially those who are new, and the common home purchaser are interested in investing in these properties is because they can take advantage of huge discounts from the otherwise expensive market value. Who doesn’t want to save money wherever and however they can?
Why do People Sell Properties at a Low Price?
You are probably wondering why anyone would decide to sell a property at a price that is less than its actual worth. The circumstances for each person are different. For some people, there is no other option left for them, unfortunately.
A major reason for properties being sold below their market value is financial demands. Sometimes, divorces and relocations can also be the cause of a discounted price. There are also cases such as freeholders being absent, homes that cannot be mortgaged, and properties that have some kind of structural issue. All these can play a role in bringing down the value of a property.
There might be a scenario where a developer tries to cover their cost as soon as possible so that they can move forward with the current project. Or maybe they need it as capital for their next project. It is quite usual that people sell available units at a low cost, but they sell them in pieces and not as separate houses. That means that you can buy those properties at a lower rate, but you will probably need millions of pounds to make that happen.
Behind all this is a driving factor called speed. Pun intended. Yes, price matters. Simply put, the lower the price of a property, the faster it will sell.
10 Steps to Purchasing BMV Properties
1. Be Certain that the Property can Generate Profit
Every property that you come across that is being sold at a price lower than the market value is not worth investing in. There is a reason some of them are unbelievably cheap!
Suppose you find a cheap yet good quality property in a rural village. Imagine it has heaven-like views and stunning designs. Does that mean you can sell it or rent it out easily? Definitely not. Even if the property is in a great area, sudden selling issues may arise. Maybe there aren’t any eager tenants around or the rent prices have fallen so far down that they cannot cover the mortgage.
A solid investment property is one that can pay for itself. You must ensure that whichever property you are considering buying is able to generate cash.
2. Thoroughly Inspect the Property
If you do not have substantial proof that your property is going to generate profit, then you are buying that property based on your gut instinct. So how can you find the required evidence?
Well, you must do your due diligence by going to the property and inspecting it. If you cannot do that, send someone you know, like a colleague or a person you trust. You can even look at the price of properties that were sold in the last year in the same area by using a property app.
Another way is to reach out to a solicitor before you decide to sign the contract.
3. Ensure there is Rental Demand
If there is no rental demand, then that means there are no tenants either. And if there are no tenants, no one is paying you any rent. In short, your pockets are empty.
Don’t worry, you can find out if there is a rental demand in the specific area for properties like the one you are thinking about purchasing. Considering searching for BMV property near me. You can do so by checking out websites and applications such as Rightmove and Zoopla. Look at the following:
- The number of properties that are available for rent now.
- How fast and often advertisements disappear, and new ones come up.
If there are too many properties available, then that could mean oversaturation. Whereas, if there is not much change in the listings, then a lack of demand is likely.
4. Look for Motivated Sellers
When coming across a property that has been on the market for quite some time, know that behind it is a determined seller. Whenever you are using Zoopla, make sure to look at the “most recent” listings, but in reverse. That way, you can see the properties that have been on there for the longest period.
You can spot a motivated seller by putting proof together that there indeed are similar properties being rented out in that specific area and that the property has been on the market for a long time. If people have not viewed a specific property on a property website for a month or maybe even more than it is possible, you can get the property at a low price. The seller is more likely to accept lower offers. This is because the more the property stays on their, the more the seller must pay up.
5. Go Through Local Listing Advertising
There exists another answer to the question of how to find BMV properties, which is also useful in terms of finding motivated sellers. It also helps find properties that are not on the market yet. That way, you can grab them before other property investors in that area can get to them.
A tailored advertisement may appear online, in newspapers, in newsagent windows, or even on leaflets if you prefer the traditional route. The best place for any advertisements to appear is in a location you have previously determined to be a potentially profitable region for purchasing real estate.
If you use this method to inform nearby property owners that you are interested in buying their properties, generating leads ought to be simple and you’ll become the first person they contact if they’re even inclined to market their homes, let alone if they find themselves under sudden pressure to do so.
6. Below Market Value is not Face Value
When you view a property from a technical standpoint, it is nearly impossible to prove that it is a “BMV”. Therefore, you need to think about other investment principles. The price of the property does not matter if it does not generate profit.
You need to ponder over your estimated profits, regardless of the length of the commitment, and scrutinise the extent of the makeover the property requires before you go for the property simply because it is cheap.
7. Do not Go Property Hunting in the Bronx
A usual mistake made by first-time property investors is purchasing a property in the wrong area. A lot of areas are known for being the best place to invest for the future as they have plans to build new shopping centres, facilitate with better transportation, huge funding, and so much more. Yet, those may not all become a reality, and even if they do, things might not go as planned.
Investment means risk, but you can also minimise the chance of loss and have a better chance of making a profit. Do not purchase property that is in an area known for being bad just because it is of a low cost.
8. Do not Purchase a Property that is Requires a lot of Work
Property investors often become excited by the price being well below the market value that they forget to look at how much work a property requires before it can be sold or rented out.
A plus point for you can be that you have builder contacts, then you can earn some extra profit through a property that needs TLC. Do not forget the risks that are involved with a property that is run down and out of shape. It is best to hire an experience and trustworthy surveyor to inspect the home and report back to you.
9. Do not Involve Middlemen
You might have heard through entrepreneurs and companies about BMV properties. Maybe you wonder how to source BMV properties UK? If you give permission to someone else to let them source your property on your behalf, you will end up paying for the property as well as the company’s commission.
Also consider why the company is not getting their hands on this offer themselves? Is it because there is something wrong with the property? Perhaps there are structural issues that are hard to find?
It is better to avoid getting involved with such intermediary parties for these reasons.
10. Be Ready to Haggle
Any property owner who puts up an advertisement for a very low price is most likely looking to make a quick sale. Or else they would increase the value to a more reasonable price and patiently wait for someone who is willing to purchase at the rate. You should take advantage of this situation.
Try to go for an even lower price and see if that works. Even if they do not agree on it, you can go back to the previous price if you still want it.
Those are all the ways to make sure the BMV property you get your hands on can make profit and not make holes in your pocket. It is never easy as a first-time buyer to know how to purchase the right BMV property. Hopefully, this guide was helpful.
Therefore, if you find yourself a BMV, do your due diligence and make smart decisions to earn a significant profit.