If you’re new to property investing, then you may not be aware of the abbreviation BMV. It stands for Below Market Value and if it’s describing a property, then it means that this particular pile of bricks and mortar is below what you’d typically pay for a similar property in the same location. In other words, you’ve got yourself a bargain.
Why property sells for BMV
So, why would anyone sell a property for less than the book price? Well, there are many reasons why property owners need a quick sale. It could, for instance, be down to debt; the longer they take to pay it off, the more the interest payments mount up, so it makes sense to get cash for the house ASAP.
Staying with the debt theme, the property may have been repossessed by the bank, who lent the mortgage finance to the seller. In this case, the lender would just want the house sold quickly – and not necessarily at market value.
Another reason could be job relocation. Rather than go through the hassle of finding a tenant and property manager, the owner just wants to sell. That way he or she can also buy, rather than rent, in their new location.
Finally, couples who split up in an acrimonious fashion often just want the property sold quickly, so they can have their share and move on with their lives.
How much can you expect to save?
A BMV could be a saving of anything from 25% to 40%, depending on the circumstances and needs of the seller. This makes a BMV property extremely attractive to property investors, because it means they have instant equity on their purchase.
How to tell if a property is BMV
There are various ways to check whether or not a property really is BMV. One of the easiest is to look at what similar properties in the same area are being listed for. Next, look back over the past 12 to 24 months to see what properties there sold for (often the listed price is different to the sales figure).
It can also help to get hold of a detailed survey, since this will highlight any structural damage or dampness – which would explain a BMV pricing. The cost to fix it would eat into what you were saving on the guide price.
How to get a BMV property
Many repossessed properties are sold at auction. Owners looking for a quick sale often take this route because it’s so quick and uncomplicated. Buying property at auction isn’t for the beginner though; if it’s your first time it’s always better to take an expert in the field along with you.
Estate agents often know of properties which haven’t been advertised yet and the owner has simply put out feelers to see if they can accomplish a quick sale. The agent will usually have a few property investors he or she knows that they can approach – which is why networking in this business is so essential!
At Sourced, we pride ourselves on our professional connections, backed up by a team of property investors based throughout the UK, from Edinburgh to Bournemouth. If you’d like to learn how to identify lucrative BMV investment opportunities, enquire about our Franchise Opportunity now.