Firstly, what is below market value (BMV) property? In a nutshell, BMV property are property that is selling at a discount in the property market.
Imagine this, you, walking in the shopping mall and seeing all your favourite items (clothes, shoes and etc..) on SALE at every corner, with the tag of 30%, 50% and even 70%.
Now, imagine you, driving around in your favourable neighbourhood shopping for your property and seeing the sign “For Sale at Below Market Value”.
Below market value (BMV) property is essentially property that is selling from as low as 20% to 40% below the real market value.
However, you will not able to see it so easily. You need to do a little bit more research about where this below market value property is and look out for it.
The next question you may ask, so what’s so good about buying below market value (BMV) property?
For simplicity sake and easy understanding, I have listed the reasons why buying below market value (BMV) property has more benefits/ advantageous, into 3Ms as below:
Margin of profit
We already make a profit when we buy below market value property. We do not need to wait another 5 – 10 years to sell it to enjoy the profit. This is because, there is already a healthy profit margin.
Let’s say a property in the market is asking for RM 500,000 but you successfully bought it at a 30% discount (or better known as 30% below market value), at RM350,000. You would have make a RM150,000 profit!
Minimise your risk
Historically, property prices depreciated at most 20% lower than the original selling price. If a RM500,000 property were to depreciate 20%, it would be worth only RM400,000. You will not make any money selling this property in a down trend market.
However, because you bought the property at below market value, you have very little risk, or none at all.
Of course, when you successfully found a below market value property, you definitely minimize your capital. Using the same example as above, you would have already save RM15,000 on the initial deposit needed.
Using the Master Key Method®, you can even structure to purchase the below market value property in such a way that not only you purchase it with minimum capital, but potentially at zero capital.