As a company that invests in real estate, we are frequently questioned about the “ins and outs” of property acquisitions that are below market value, or BMV. What is the value of BMV properties? How should a BMV deal be leveraged? Why are homes with these three letters so sought-after? And that’s before you even consider portfolio building, real estate investing advice, or defining technical terms.
So, to broaden your knowledge of all things BMV, we’ve answered our most frequently asked questions below…
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There is no getting around the fact that property investments carries risk, just like other investments do. But if you ask us, investing in real estate, especially BMV, is one of the safest bets you can make. Your prospective yield rises when you purchase below market value, which in turn lowers the risks.
Your response will depend on two things: the prospective yield and your current circumstances.
Location will probably be important for first-time investors. Finding a property with expansion potential where value may be added can also help. They can be looking for a quick flip or their first “Refurbish, Rent, Refinance” deal. A decent rule of thumb is to have such a property close to your home, especially if you want to undertake the work yourself or rent it out privately.
While more seasoned investors tend to favour yield above location and make investments in both commercial and residential properties.
Get in contact if you need help deciding where to invest. We will gladly share our knowledge of the field with you and assist you in locating some suitable spots.
How much money you invest relies on you and your circumstances, just like with any investment. However, you might be able to lower this expense if you choose a BMV property. Consequently, you’ll be able to invest more quickly and increase your crucial cash flow.
NOTE: Prior to making an investment, we always advise having a few thousand pounds extra in savings. A safety net is a sure thing.
Property investments are always a good idea. The UK real estate market is experiencing an upward trend overall, notwithstanding monthly fluctuations in house prices. Additionally, as the population of the nation grows, so does the need for homes. Among the causes for the popularity of real estate investment!
Property investment has a tonne of advantages, especially when you go BMV.
You might start by increasing the worth of your property to create equity. This might be done by doing it yourself, working out a tricky freehold problem, or adding more space to increase the value. When it comes time to sell, you should make a healthy profit if you do so for less than the value you add.
You can also rent out your property if it is a second home, which is another excellent strategy to increase your yield. Jump into the scenario below to see how profitable rentals really are.
You spend £75,000 on a home that you intend to rent out. The average rent in the region is 750 PCM, but let’s suppose you’re looking for a short lease and haggled down to £700 PCM (or £8400 annually). Still, you’ll get a yield of 11.2%, so the house might be paid off in less than ten years!
Of course, you also can’t forget about capital growth. Since the housing market is known to trend upward, you can also get a pleasant surprise when you decide to sell up, in addition to a rental income. Don’t just take our word for it; Property Data reports that house prices have increased 38.5% over the past ten years. Your £75,000 buy would now be worth more than £103,000! Additionally, even if you didn’t want to sell, you could use a refinance agreement to take out this equity and increase the size of your portfolio.
A 10% yield tops a 0.5% savings rate, making property generally a much better investment than banks, although there are always hazards associated with any plan. So, we advise you to consider these before beginning to dabble in BMV property. Three things to think about.
Property Values Can Change
Property values do rise over the long run, but the market can dip and rise quickly. So, if you’re considering a short-term property investment, this might be something to consider more carefully.
Vacant Periods
Renting a property is done primarily to produce equity and cash flow. However, any costs incurred when the property is vacant for a while (perhaps while you’re between tenants) will be your responsibility. Something to keep in mind both when choosing your property and managing it.
Maintenance
You’ll need to perform upkeep on your BMV property while you own it if you want to rent it out or even sell it. This might not be as much of a problem if you’re looking to flip, but it still might wind up costing you. This is why selecting a quality group of tenants is essential if you plan to rent out your house.
You’ll need to spend less time and money performing errands if you have tenants who won’t damage your property as much. For example, you would anticipate general wear and tear to be much larger if your tenant was a family who stayed inside for the majority of the day rather than a businessman who just came home occasionally.
The solution is already right here for you!
The properties we deal with at A&K Enterprise Ltd are all offered for less than market value. We find these on our own through our sister business, which also happens to be one of the biggest homebuyers in the UK.
Please let us know if you’re looking for BMV property in a specific location, of a certain size, and tailored to a particular investment plan. We would adore working with you in partnership to find properties.
BMV, which stands for “Below Market Value,” is a word frequently used in connection with real estate investment. At least from the standpoint of an investor, BMV property is undoubtedly the most attractive type of property. Due to the fact that properties below market value frequently have greater yields and hence provide superior ROI.
This is entirely dependent on where you invest, therefore we always suggest doing your research before putting money on the line. For particular forms of property, certain places have high yields. Others prefer buy-to-let investing to property flipping. Others are the opposite. Some even function well in both directions.
A good yield would be in the range of 6–7%, though.
You will have a large selection to pick from when you invest in a BMV property from us. We offer a wide variety of properties, so there is a good probability that we will have something that suits your needs. We offer you properties with buy-to-let or flip potential.
Contact us by emailing us at sikorsky.alex@gmail.com; we’re simply a phone call at 01575 520272 away to learn more about the properties we currently have available.
