Parmdeep Vadesha: Buying Property Below Market Value

The secret to a good investment is to buy at the lowest possible price. It improves a property investor's strategy and decreases their risk of getting caught in a negative equity trap.

Many experienced property investors know that the secret to a good investment is to buy at the lowest possible price. For many of them this is evidently a central part of their investment approach as this allows them to enhance their strategy and decrease their risk of getting ensnared in a negative equity trap. One property expert who effectively uses the technique is Parmdeep Vadesha.

One of the most distinguished property experts in the UK, Parmdeep Vadesha built a passive income producing property portfolio and achieved financial freedom at the young age of 25. One of the methods he used to attain his financial goals is to buy properties below market value (BMV) – essentially below the prevailing market value. For a lot of investors, this strategy is an effective way of earning enormous profits at the time of eventual sale.

Buying below market value

Obtaining properties at below market value prices is possible in any market. Parmdeep purchases average homes in average areas with strong rental demand. Some property investors go for the off-plan option where the property is subsequently sold while demand is still strong but has not yet reached a saturation point. This allows investors to take advantage of the normal supply and demand law where prices escalate as the number of buyers wishing to make a purchase rise.

Why properties are sold below market value

As millions of home buyers reach the end of their fixed rate mortgage deals, many of them face tremendous increases in mortgage payments. Moreover, as lenders continually tighten their lending requirements and increases in wages keep falling short of the cost of living, more and more home owners are realising that paying their financial dues is more difficult than ever before. In these situations, selling their property quickly is often the only alternative.

Here are some other reasons why people sell their properties at prices significantly lower than the market value:

* They may be unable to pay their mortgage obligations due to sudden job loss or a divorce and are thus facing repossession
* They may have plans of moving abroad and the only thing holding them back is their property
* They may have become heir to a property located out of town and aren’t willing to deal with the matters associated with the sale
* They may be property landlords who are experiencing negative cashflow or have had the property trashed and would prefer to sell their property

Where to find BMV properties

Here are two of the most popular ways in which investors can find BMV properties:

1. Advertising
One of the most common ways of finding BMV properties is by advertising for distressed sellers. Many investors now use leaflets, the Internet, the yellow pages, newspaper advertising and even Radio and Television to source their investment properties.

2. Buying at auction
Investors looking for BMV properties typically go to auctions where a property is usually sold at a price which is 15 to 20% below the market price. Savvy investors are sometimes able to snap up bargains at up to 30% below estate agent prices.

These techniques and more are what made property expert Parmdeep Vadesha a well known property entrepreneur and one of the youngest to have attained the financial freedom that many have only been dreaming about.