BMV, or Below Market Value Properties are properties that are listed for sale below their market value, or below the value of their municipal assessment. There are several reasons why a seller might choose to sell below market value: financial difficulties, repossession, urgency, or misinformation are just a few examples. Finding a BMV property is a main objective for any real estate investor, since these listings allow for maximum returns on the investment upon resale.
How to find BMV properties in Montreal
- Set up a property alert for repossessions in your preferred neighbourhood. Repossessed homes tend to be listed below market value since they are being sold by the bank, rather than the seller. Note: indicate that you are looking for repossessed properties in the “Additional Criteria” section.
- Request a list of top properties listed below municipal evaluation in Montreal.
- If you think a property might be listed below market value, request a free professional evaluation of the property’s current worth.
- Ask your broker to send you his or her own selection of BMV properties. Many brokers have access to pre-market BMV properties, which are likely to sell even before they are listed online.
- Subscribe to a Deal of the Week mailing list, which will send you the single best BMV property on the market every week by email.
Benefits of BMV Properties
1. Buying a property below market value reduces your risk as an investor. Chances are you’ll be able to sell at a higher price than you bought for, with more potential for property appreciation.
2. Positive cash flow – buying a rental investment below market value increases your chances of making passive income every month. Reduced prices mean increased net yields.
3. Buying below market value offers a large range of exit strategies, for example, renovating the property and flipping it at a profit. Buying BMV will make your resale more lucrative.
5. Affordability – Buying BMV allows first time buyers and investors to get their foot in the door at a lower price. With a smaller initial investment, buyers can renovate and refurbish on their own schedule, when their finances permit.
Risks of BMV Properties
- Buying BMV requires a good understanding of market trends and market values. When buying in a developing neighbourhood or during a time of economic recession, it’s important to have a good understanding of when and how the market will stabilize. You’ll also need to have the financial means to support your carrying costs, in case the property is slow to resell or rent out. Unless you yourself have lots of experience in the property market, it’s crucial to work with a trusted real estate professional when buying BMV.
- It is often the case that BMV properties have major structural issues or are in need of cosmetic renovations. Be sure to read the seller’s declaration carefully, and to choose a reliable inspector. Once you’ve gotten a good idea of the works to be done, get a quote on the expected costs to ensure that the deal is still worth your time and expenses.
- If a homeowner is selling under market value, there may be an unexpected reason for wanting out. Have your broker inspect the co-ownership minutes and the city plans to make sure there isn’t a pending lawsuit, an undesirable urban project underway, or an issue with the condo association finances that could affect the property’s longterm value.
All in all, buying a property below market value can be a lucrative way of investing in real estate, as long as you do your research, understand your risks, and work with a knowledgeable broker by your side.