It can take some serious homework, research and good networking and relationship building skills to source these types of properties. But if you are successful, you can find yourself in a very lucrative and cashflow rich situation providing you have sourced the right property at the right price. Many new home builders will offer incentives throughout the year but if you approach them near to their financial half and year end points, then you may be able to bag yourself discounts of up to 20%. It is at this time of year where they will be keen to show more sales on their books.
It is also possible to acquire BMV property on re-sale properties. This can often be achieved by sourcing properties that have been on the market for a considerable amount of time. They may need some simple cosmetic refurbishment or could lend themselves to some simple extension or building work to bring them up to a better standard. Alternatively, the vendor may not have the funds to do the work themselves but are still very keen to move. The occupants may be separating and not willing to spend further money on the property. Yet at the same time may be very keen to secure an offer to enable them to go their separate ways at the earliest opportunity. Therefore an offer from yourself with the ability to proceed immediately and not in a chain could be very appealing to them.
In 2006, statistics showed that the number of repossessions had risen significantly and sadly due to the economic climate in 2008 this figure continues to rise. With this in mind, it is worth considering that properties due to be repossessed would have occupants who are in a very ‘desparate’ situation. And quite likely not wanting to vacate the property. One solution may be to purchase the property from them at a reduced price and offering to rent the property back to them. This way the occupant retains their property but as an investor you have purchased a property with instant equity in it and not had to fund and source finding suitable tenants.
The other option may be to purchase the property from them at a reduced value. You may then agree to purchase a smaller property for them to rent off you at a lower monthly rental figure. That way if they couldn’t afford the market rent on their current property, you are offering them an immediate solution when their property is sold! You may already have suitable properties that they could consider moving to.
BMV Below Market Value Properties