Investors Attracted By BMV Properties

We all love to get a bargain and property investors are no different.  Below market value properties are the opportunities that most seasoned people involved with property investinglook for and with market conditions being a gloomy as they are there has never been a more certain time to be able to find them.A word of caution though, like all investments, if it looks too good to be true, it probably is but there are some simple rules that can help ensure you end up with a property that’s worth owning.The most important step is to check your prices and then check them again.  Property prices are never clear or straight forward.  If beauty is in the eye of the beholder, then you can say exactly the same for a property price as well. A highly subjective issue, the key is to get a different perspective so that the real market value of a property can be seen.Using professional sources of comparisons for property in the UK such as The Land Registry, The Royal Institute of Chartered Surveyors or a third party reference such as the Investment Property Databank is a good place to start.  Indexes such as these will begin to provide that degree of objectivity that’s necessary before you can feel confident a BMV investment really is BMV.Comparisons such as the average house price marker loved by many professional lenders as indicators of market position should be regarded very cautiously.  The average price of a house is literally that.  If a large number of very expensive houses are sold then the average marker will be distorted up.  Similarly, if the market sees a large number of lower value properties, the average will drop.  This measure is really only useful as an indicator of change.  It certainly can’t be used to bring objectivity to a BMV valuation.Probably the safest way of checking a BMV valuation is by looking for comparison properties.  If the next door property to the one you are considering has been sold in recent weeks you have a good measure, but you will still need to take account of issues such as the condition of the property and any desire on the vendors part to secure an early sale.There are some general rules of thumb – mostly relating to valuations that are worth bearing in mind when looking at acquiring a BMV property as follows;

• Find comparison properties, as locally as possible

• Ensure that the comparison property is as accurate as possible using professional statistics.

• Sounds too good to be true? Check again because there’s probably a catch.

• Who’s offering you the property and what do they get from the deal; this could heavily influence their BMV valuation

• If you buy, where does your profit come, what’s your way out, your exit strategy?

• What would you pay for this as a non BMV investment?