I’m going to share with you the three ways that you can either add value, get a discount, create value in a property purchase and how you can secure BMV (below market value) deals.
First off, a lot of people are saying BMV is dead which is rubbish and they’re probably just not educated in how to find them because if you buy genuinely below market value, that’s how you make your money on your purchase as well as securing a solid long-term investment property.
So, how do you get 25% – 47.5% BMV property deals that most people think are impossible?
This strategy works in three ways and if you utilise all three ways in conjunction with each other then, even if you have zero or little experience you can secure deals at 30% below market values.
Okay, so the number one is the way simply securing a genuine discount, for example, you buy a property and it’s worth £100,000 and you negotiate and secure it for £80,000 and that’s a 20% discount and a big mistake a lot of new investors make is not attempting to get a discount on their property purchase.
And you can secure more genuine discount deals if you position yourself correctly with the estate agent and the vendor as a professional property investor and you will maybe secure 1 in 5 20% BMV deals just by negotiating.
So the first thing you need to do is calculate the BMV discount into the purchasing process and just try to get all of your added value or your discount through this purchasing process.
The second way that you can add or create value and secure a discount on your property purchase is to refurb now, and again this is simple and you’ll probably know this already but so many people don’t do it either because they don’t know or don’t understand but with our developments, the mantra has been for refurb jobs to spend £1 to create £3 of value. This means that you should be excited when you view run-down properties that are in no fit state because most people will see this as too much work but for smart property investors, you will see a refurb opportunity to add value.
Generally with refurbs if you have the right team around you, you can refurb a three-bedroom house with new carpets, boiler services and get the property looking brand new for £2,500 but this could add £10,000 to the value of the property. For £6,000 we can re-deck a property with new bathrooms a new fully fitted kitchen on a three or sometimes five-bedroom house so there’s lots of value that can be added when you take the contrarian view and do the opposite to the masses.
Because when others get fearful of a deal it’s time to get greedy because most investors will not want the dirty looking property because they simply do not see the value. And it’s also important to remember that we don’t do full rewires, we don’t really touch the boilers and we certainly don’t do any structural work because you’re into another world of development then and I’m not a plumber and I’m not a developer and if you’re looking at getting into property to benefit from capital growth, this is the investment strategy for you.
Okay, so the third way and this is important to note that, this way has been abused by unethical people or companies in the past and this refers to the valuation of the property, because there’s a right way of going about doing this and I’m going to tell you the right way that works for you and that’s real and that makes you money.
But first, here’s what you shouldn’t do, because It’s not about putting money in a surveyors pocket or trying to hoist up values like has been done in the past, but there is a way that you can really get the values high in an ethical way.
It’s called getting the spread.
So our Acquisitions Manager has a Rightmove trick that can help you find a large differential between the lowest and the highest value properties in a comparable or area. So, let’s say you’re looking at a three-bed house and it’s listed on the market, you can use this comparator trick another property of the same type of build on that street or within another district for a cheaper price.
Every single time when we run our three-day masterclass at Progressive Property and we do our Gold Mine area training where we help people find 8%-12% Gold Mine gilding areas right under their nose we use this trick to find spreads of 20% 30% 40% BMV deals in your investment area.
Now, they don’t all look nice and they’re a bit run down but usually, they’re motivated sellers and the really nice ones with the curb appeal where there’s no motivated seller, that’s the spread and that’s the way where you can get an increase in valuation price.
So all in all you’re getting your discount on the purchase price, you’re adding value through a refurb and you get an increase in value because you know the maximum industry value so you can secure a deal and all of a sudden you can sell it for 50% more than you purchased because you secured it for 35%-40% BMV and that’s the trick.
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