August 29th, 2014. Ben Lloyd
How to Find Properties Below Market Value
When it comes to investing in property, the cheaper you buy for the more money you stand to make. Buying under market value is essential for a strong investment, although finding these properties can be very difficult.
Here are a few tips to help you find the perfect investment gems and get the best prices on below market value properties:
When people need to sell properties fast they tend to accept a much lower price than they would under other circumstances. For this reason auction houses or individuals who explicitly state they need a quick sale will tend to offer you the best possible price. Auction houses are perfect for getting a great deal, especially if there isn’t much competition over the property in question which means that you can get it for a fraction of the market price.
As an investor it is a good idea to build a close relationship with estate agents, as they can give you a heads up when a good investment comes along. Many estate agents also have their own portfolio of properties, so you may not get first choice but you could get a shot to grab a bargain ahead of the general public.
Find Bank Foreclosures
Taking advantage of someone else’s misfortune may seem like a heartless thing to do, but it can make you a small fortune if you do it right. When someone defaults on a mortgage and the bank claims the property they tend to only try and make their money back – that means that properties are often sold for 80, 60 and even 40 percent of their market value.
Haggle the Price
One of the first things you should learn about buying a property is that the listed price is what they want for it. That means that it isn’t what you need to pay. Always go in with a low offer – sometimes the seller will surprise you and bite on the first offer, especially if they haven’t had any interest in a while. If they don’t accept your first offer, then work your way up slowly but remember what your cut off point is and stick to it.
Get an Accurate Valuation
Often estate agents will inflate their valuation in order to maximise their profits or banks will undervalue a property to minimise their risk. This can sometimes mean that it is hard to figure out exactly what the true market value of these properties is. Before making any financial decision, make sure that you get an accurate valuation from someone you trust – this will give you a much better idea of what price you should be looking at.
Avoid Middle Men
In recent years there has been a rise in people and companies providing you with a selection of ‘below market value’ properties. However, you need to think “why would these people pass on these great deals?” The answer is that they are either getting paid commission from another source or aren’t providing you with a deal as good as they are making out. Try to avoid these middle men as much as possible in order to maximise your profits and avoid being scammed.
Get the Best Finance
Having the right finance is important and a commercial investment mortgage broker can help to ensure that you make a strong profit. Having the best rates and packages that are tailored to your needs will help you avoid sinking in debt, making repayments and managing your investments much easier. Having the right finance could be the difference between turning a profit and losing money regardless of how cheap you bought the property for.
Article By Ben Lloyd
August 29th, 2014
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben