When sourcing a property, whether it be via an estate agent or privately, you will want to achieve the best price you can obtain, but often when a property is purchased below market value (BMV), you need to be aware of any issues with the property.
You are unlikely to purchase a property BMV without taking some risks.
Remember that when purchasing a property, no matter how eager you are to complete on the purchase because you think you are getting a good deal, any issues that do arise could come back and haunt you on the resale. How you view this really depends on your attitude towards risk.
We find every property investor has a slightly different attitude. Whereas one investor will be more than happy to purchase a property at 30% BMV and accept that there are some issues with the lease or no expressed right of way (to give two of many examples), another investor will not be willing to take these risks in fear of being stuck with a property that they cannot sell.
From our experience, we tend to find that virtually every property will sell eventually but you may have your money tied up for several years.
One way to offload the property is to sell at auction which is a common route to take.
When purchasing a property at a discount, you need to weigh up the risks and rewards.
Ask yourself if you are comfortable in achieving a reduced price on a property that may pose some problems on a resale.
Are you prepared to wait to receive your profit?
And do you have an exit (Plan B) should the deal not go to plan?
This article was written by Dean Alexander of D&S Legal
DISCLAIMER: This article should not be regarded as constituting legal advice in relation to particular circumstances. This article is merely a general comment on the relevant topic. If specific advice is required in connection with any of the matters covered in this article, please speak to D&S Legal directly.