How will Eric Wu expand his portfolio to $10 million

just my 2c here:

when an investor does his/her research, with extensive research, he/her could spend 3 months to understand the targeted market, putting in a few offers to test the market, going to open house, chatting with agents, and follow many properties when they were on the market and subsequently sold. these research would give he/her a good understanding of the values of these properties, it could come to a point the estimated value of the investor is very close to what it worth. if he/her can buy under that, I would say it is BMV, let alone potentials to add value.

 

I still think BMV is a marketing term that has been adopted as a "strategy".

What you have described above is true - but its not BMV.

Research, understanding the market, being able to estimate the value of the property and coming up with a winning solution for all parties faster than the person next to you is key.

Other than common sense + experience, I don't know how else to describe it. But it guess it doesn't sound as sexy as "Below Market Value".

The research and understanding isn't just limited to property, it applies to almost every aspect of life. From dealing with people at work, doing work, picking up people of the opposite sex at a bar.

There have been instances where I have heard of scenarios where Below Market Value can exist, for example, the vendor has deliberately turned down higher offers so that a young family who cherish and build upon it (as opposed to a developer who aims to tear it down).

 

I have seen many times distressed sellers willing to sell below what they normally could get for all sorts of reasons. If your quick enough and move fast enough you can snap up BMVs in this situation. Also OOA agents have been known to sell real estate below what its really worth because they often don't understand the values and comes along a sharp investor who pounces on the agent making an all cash offer with no clauses and the vendor doesn't know any better and sells. There are agents who also have relationships with buyers and offer them deals before it hits the market at a BMV price if the terms are good.

This stuff happens more than people think, and if your an aggressive investor working all sorts of angles and networks...you know what to do to chase these deals and hope to nab one. It definitely happens and that's why I believe without a shadow of a doubt that BMV opportunities exist.

The fact that real estate is probably the most imperfect of all markets leaves it open for manipulation and tactics imo.

 

What I have done in the past is to encourage clients to sign a contract with an amount on it. This is held on to and not exchanged. Valuation is done based on this contract and then problems are found and the price negotiated Down.

 

You are largely right that a property is only worth what someone is willing to pay, market value is more of an applied science than an actual science.
10% on a given day? please let me in on which markets are fluctuating that much regularly>?
this isnt share trading hahha. but I can agree the market can take big swings quickly, but not 10% overnight, maybe people get deals that are 10% different to someone else, say an auction buyer got a very simular property at 10% difference to similar property. and I guess you could stretch that to say thats 10% fluctuation.

some will, I do CMA's and property valuations for work, all I was trying to get across is that you can buy below Market value. thats all mate, and the 7% was based against the property prices at the time of which there was a lot of data and you can go research if you'd like the address?

The main point Peter is a lot of your points are 100% right and truthful but we have to work out what properties are worth today on the market yeah? now thats not exact, its guess work, but its what it is.

even thouh banannas lets say range from 99c to $4 a kilo, if I get for 20c a kilo in bulk and was savy about it and hustled the deal, did I not buy under market value if tomrrow everyone is paying $1+

 

Not exactly true, definitely not a myth. Of course agents aren't going to list on REA houses under market value for everyone to see but I can assure you they do come up. You have to be the lucky one the agent calls or have very good connections in the area you are looking in. Using a Buyers Agent will give you a better chance, selling agents will call a BA as they know we have multiple buyers waiting to snap up good deals. Often sellers will want to sell quickly, could be a divorce and everyone wants out asap or could be simply the seller is embarrassed about the condition of their property and do not want open homes or marketing/photographs, the buyers agent will come through and inspect then call their buyers.

There are agents who also have relationships with buyers and offer them deals before it hits the market at a BMV price if the terms are good. And lastly you have agents who don't understand the true value of a property and will sell it for less than comparable properties.

 

Agree Richard, these deals do come up. However using "BMV" as a strategy on it's own - not really a strategy and it can't be done on every single deal for all clients.

 

Agree 100% if you are only going to buy UMV it will be a very slow process to acquire properties that are genuinely UMV. But for cashed up investors they are a great opportunity. Lots of people spruiking UMV but the true ones are hard to come by!

 

Yep! Need to have the resources to wait it out. UMV does not always mean a quality property either - perhaps a UMV property will always be UMV when you come to sell it in future.

 

BMV = a house which needs work done to it
To bring it up to market value. This takes time and materials which = money.

 

I don't agree with above. Most investors let alone owner buyers know what a property is worth. Buying and doing renovations is not buying Below market value.
You may increase value. But at a point in time in condition that property is worth that money

 

For me BMV is being able to sneak in quick and buy a property for X dollars less than comparable properties have sold for. Imho this definitely does happen now and then for various reasons. Property being the most of imperfect markets, it does allow for bmv to happen, I've seen it many times over the years.

 

I do the same.
Except i call that Due Diligence and Market Research

 

Couldn't have said it any better