Investors are constantly looking for the best ways to make money through investment properties. Finding and investing in properties below market value (BMV) is a great way to generate instant equity, which can be converted into profit. However, it is not easy for people to find real below market value property easily. Hence, to their rescue comes invest in buy to let. When an owner of a property has to sell a house due to unfavorable circumstances, the owner is usually forced to sell the property below market value.
Historically, BMV properties were those where owners could not afford to keep the mortgage payments up and were willing to do quick sales with motivated buyers. Now, a property that is below its’ market value is usually because of a bulk deal, the strength of the agent’s relationship, the need of seller to have cash flow or the seller’s requirement for pre sales on a site. Disposing of property less than market value means investors instantly are locking in profit into their purchase.
So why do vendor’s sell below market value in such a good market? Surely they can wait to realize the full value on the open market?
- Often, developers building new sites like the idea of securing presales on some of their units. This satisfies banks that are lending them money to develop. It also means that the Developer can sleep peacefully at night knowing that some of their units are already sold. They appreciate that investors are looking for a deal. They also appreciate that they may simply be selling off-the-plan at this stage and discount the properties to compensate. The result is, you are likely to get a below market value property.
- There are also times where developers need to sell the units on their site quite quickly in order to move onto another project. They are prepared to make less profit in the first site in order to acquire the next site which may be more profitable for them.
Other reasons where investing in below market value property can be genuine:
- All developers that build sites usually do this as their full-time business. This means that they have targets to hit, accounts to file, new projects to take on. If you catch the Developer at the right time, you may well walk away with a great deal. Here at Invest In Buy To Let, we have worked with majority of the developers in the UK (large and small). We always give them a call close to their year-ends, half-year ends – just to see if we can pick up any gems. More so now, developers contact us with under-the-radar deals so they can hit their targets – they know we have motivated buyers ready to purchase below market value properties quickly.