Below Market Value Property

If you are a below market value property investor you are probably financially aware had an interest in property before you started to invest and sourced and bought your first home as soon as you could, probably in the 80’s or 90’s, when property was still affordable for first time buyers.

But what of the new generation of potential bmv property investors, will they even be in a position to buy in their 20’s and 30’s? I was thinking if you are in your late 30’s or 40’s nowadays and don’t own your own home you would no doubt be looked down upon by your peers, indeed it is unusual to find someone considered to be middle classed not to own their own property. We are considered a nation of owner occupiers after all.

If you own a property and have a reasonable sum to invest as well as a clean credit history you can pick up a below market value property for as little as £5,000 down, provided you are a homeowner. This brings me onto the 20 something’s of today, I am hearing more so than ever of children living at home and depending on parents for longer. Not only this grad jobs are harder to come by and credit availability is at an all time low. It’s becoming the norm for the young to put off investing in property and buying their first home.

However, with the next general election fast approaching we could be in for another property price dip as the new government attempts to rectify our dire economic situation. This means some very good bmv property deals could be available and property in general could become more affordable to first time buyers, assuming they can get a mortgage.

I would never suggest to anyone that they should use credit cards to buy a bmv property even if it was the deal of the century. But I did read a news piece on BBC News today that took me back a few years.

Back in the day when house prices were soaring and you were assured to make a killing if you bought in the right location, especially in London. I remember several of my friends buying their first property using credit cards. I thought they were mad at the time. But they assured me that it was a sound strategy, which was sure not to backfire.

At this time I also recount several people doing the same when they purchased bmv properties as well. Some of these deals only required a few thousand down so they chose to stick it on the credit card.

On reflection this really epitomises the kind of reckless credit use that got us into the mess we are currently experiencing. Back then the ever increasing prices spiralling out of control fuelled greed and arrogance, of course this persisted and led to many bankers trading in mortgages that could never be paid off.

As a bmv property investor I value money, which is why I choose to invest at all. But at the same time you need to be able to think with a realistic and clear head.

In the past many property investors had a choice. They could either buy a bmv property and flip it making a quick profit in the process or hold on and let it. Nowadays, it’s a different story. You can’t rely on increasing values to support your bottom line, you have to think long term.

Some bmv property investors are against becoming landlords and generally source property they can quickly sell on. I on the other hand have a different view. I enjoy building a strong portfolio and watching the rent pour in at the beginning of each month. Of course there are drawbacks, but nothing is ever perfect.

In times like these it pays to have a long term strategy. I prefer to be an investor rather than a trader of properties. There is nothing wrong with flipping properties, especially, if you buy below market value. But to me building a tangible property investment portfolio for a future nest egg has always sounded more appealing than pension fund. I’ve heard of too many nightmare stories of old couples losing their entire life savings over night to want to go down that route.

Even though the property market is down at the moment there is plenty of opportunity out there to grab a really good BMV deal. We have lots of great below market value properties on our books for more information; please get in contact with one of our advisers.

BMV property investors all over the UK will be delighted to hear that property prices increased by 5.9% last year according to Nationwide. However, they are still 12.2% lower than October 2007 levels. Many property market experts have said they were surprised by the outcome, but believe 2010 probably will not be as good and in general the market will be pretty stagnant.

Although this is in stark contrast to the 15.9% fall experienced in 2008. Nationwide said that prices improved in 8 of the months in 2009. The average cost of a home in the UK is now £162,013.

UK BMV property buyers who bought a property in the last 6 months have probably been relying on rental income, but it seems you could soon start to make some money from the increase in value as well, if 2009 is anything to go by. The recession has made us all more prudent and savvy investors as it is now more important than ever to do your homework and look long term. Hopefully this will continue and people who over leveraged their portfolios back in 2008 have learnt their lesson.

In 2010 that interest rates will hopefully remain low which should help mortgage borrowers. The future of the property market is largely uncertain, but as long unemployment rates don’t grow and public sentiment in the economy is not damaged further large dips in the UK property market should be avoided.

Traditionally speaking January is a quiet period for property investing. But this does not mean you shouldn’t look. There is less competition around for one. If you are thinking of buying a BMV property in the North East of England we have lots of great deals on offer.