My Top Tips to Buying Below Market Value (BMV)
Buying BMV is investor speak for "Below Market Value" and if you are interested in cutting a keen deal, here's how I go about it...
- Get Ready to Go Early ! -Most buyers prefer to purchase in developments close to completion, when they can see the infrastructure coming together and the handover date is fast approaching. But did you know to assist in financing most projects the developer offloads the first half-dozen units at cost-below market value to trigger the finance in the hope of selling the rest at the going rate.
If you are a buyer who's prepared to sign a binding contract when the project is first released, you're giving the developer something other than money- you're the key to unlocking what he hopes will be a lucrative project and he is willing to trade this for a price cut to below market value.
- Strike Out on your own - Don't follow the crowds - When people were piling into areas like Spain five or six years ago I held off. Likewise Florida, 3 years ago. But now I am looking at both these markets and feel confident there are now many a below market valuation to be had. Timing is the key and with a glut of projects being completed and as the number of people planning to buy has faltered, the timing appears just right. Asking prices are down on last years and there's much more scope for negotiation to achieve that all important below market value.
- Use Bench Marking to spot bargains - If the aim is to buy below market value, it helps to be clear about what "market value" is. In the UK, we tend to price our homes according to the number of bedrooms- which may explain why so many UK new-builds have such pokey sleeping accommodation. In some other markets, prices per square foot or metre is the yardstick. Where it isn't, I use it - religiously.
- Pick your currency- Its all in the timing. Buy a property at market value but when the currency is weak relative to the UK pound. When the rates returns to its long-term average, you'll find bought, in sterling terms, below market value. The States at the moment is an obvious example. The dollar is normally worth 1.70$ to the pound but today its close to $2. Buy there now, wait for the exchange rate to normalise and you'll make 17 per cent. If you want to play the currency game its best to put as much cash as possible into properties in countries where their money is weak and borrow where it is strong.
- Choose your moment - In the car trade, it's given that its easier to sell a soft-top in May than November, for obvious reasons. The same applies to homes abroad, although the pattern can vary. Buy out of season in a seasonal resort, especially one where flights stop, or are much reduced, at certain times of the year: not only are few people thinking of buying there at that time, but simply setting up a viewing can be a challenge. Granted most vendors will wait for the weather, visitors and flights to return but if you seek out the motivated seller who'd rather take a low-ball offer than wait six months, you could see a below market valuation offer being snapped up.
- One mans loss, is another mans gain - Investing in property is a commercial business decision, emotional is should not be. For every loss someone suffers, someone will be a winner. The recent world-wide credit crunch has spawned many nightmares for purchasers who bought at the top of the buying cycle, paying over the odds as the buying frenzy took demand above supply. But now the correction leaves them "high & dry" with spiralling mortgage costs and the realisation they have totally over stretched themselves. These people are now highly motivated to cut their losses, save their credit rating and inclined to accept way below market values for the chance to escape their nightmare. This is your chance to grab a bargain and maximise your gain when that property market returns to normal behaviours.
By employing tactics to buy below market value, shared with you, I am very confident that you can start achieving amazing wealth. I know it has worked for me.