Below Market Value (BMV) Property: What is it? How to source it? How best to buy it?

BMV, the abbreviation for "Below Market Value" is a term many will be hearing more and more often. This lens aims to clarify its meanings and the causes of its popularity.

Well it's certainly not difficult to ascertain that BMV property in simply property that is sold below True Market Value. So what is 'True Market Value'? True Market Value (TMV) is the "estimated amount for which an asset should exchange on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion" (source: Red Book: RICS Appraisal and Valuations Standards)

Interestingly it is impossible to tell precisely what the market value of a property is at any particular time. The best idea can only really be formulated through a comparison of what other properties in the area are selling for. But this again can cause problems in that the asking price of a property may not reflect the market value. Simply put, getting a discount on the asking price is not the same as buying a property at BMV.

Buying BMV is becoming popular for many reasons. Buying a property BMV often ensures that a deal 'stacks up' if you're looking to rent the property out. It can also secure a quick and modest profit through 'flipping' or re-selling the property soon after the purchase and it has also become increasingly common to re-structure a BMV property into a 'low' or 'no money down' investment deal.

BMV is a term you will find used most by property investors. Why? Well often enough for a property to be deemed a sound investment opportunity it has to meet certain criteria unlike those you are looking for when simply looking for a property for yourself to reside in. Property investors are looking to purchase a property to rent, or purchase the property to sell. So from an investment point of view a property that is bought BMV effectively locks in instant equity which can be turned into profit through purchasing to rent, as long term investment strategy, or purchasing to sell as a short term investment strategy.