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Sourcing Below Market Value (BMV) Opportunities

When it comes to property investment, similar to equity investment, every investor is looking for below market value or BMV investment opportunities. These essentially refer to properties that are marketed for lower than their actual market price, which is often determined by recent transactions of comparable units in the area.

It is often said that the best way to find a BMV opportunity is to look for a motivated seller, or someone who is looking for a quick sale. And there could be a number of reasons why someone may want to do so. The three ‘D’s have often been cited as common reasons why sellers want to sell a property at a discounted rate:

  • Death: In most cases, upon death, family members usually would opt for a quick sale so that the assets can be distributed to the relevant beneficiaries.  
  • Debt: The seller may be facing a financial difficulty and hence is looking to liquidate his/her asset to gain some liquidity; or in cases where the bank has repossessed a property, they would be looking for a quick sale to regain their principal.
  • Divorce: Property tends to be a sticking issue in many divorce proceedings, and couples would rather opt for a quick sale to ensure a clean break.

Nonetheless, while there many motivated sellers out there, it is not easy to locate these sellers. It takes time and effort working on the ground and building relationships with local agents, solicitors, lenders, and others within the property chain, who may be able to sound them off to potential opportunities. This can be challenging for busy or passive investors, who are not local in the area or who may be based outside the United Kingdom.

In our experience at Focus Property Investments, we have found that one of the most effective ways to source BMV investment opportunities are through the property auctions, which occur regularly throughout the year across the United Kingdom and in London especially. One key reason is that motivated sellers are looking for speed and certainty – two factors which can be achieved through auctions. Once the hammer falls, the two parties are considered to have exchanged contracts, and the buyer would typically have between 14 to 28 days to complete on the transaction.

However, this often requires careful due diligence prior to the auction, such as viewing the property, establishing the background to the property and context for the sale, examining the legal pack for any red flags etc. Over the past 15 years operating within the property auction houses, we are spotted numerous brilliant opportunities, but also many awry deals which were nicely packaged to allure the naïve investor. Yet, once the right deal is found, it can serve as a great win-win outcome for both the seller and the buyer.

If you are a value investor, and are interested in sourcing below market value investment opportunities in the United Kingdom and London, please get in touch with us to explore how we can support you in building your property portfolio.

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