To be able to calculate how much below market value a property is being sold for you first need to calculate the market value; that should be self-explanatory, it is the value of the property right? OK, so is that what the vendor or agent is telling you? Is it based on 2-year-old comparables adjusted for market inflation or the figure that bloke Dave gave you when you met in the street whilst assessing the condition of the roof? An economist will tell you that the value of something is what a buyer is willing to pay for it, but that isn’t particularly helpful either. So, if you are new to an area the best way to value a property is by using all the figures you can gather (except for Dave’s) and applying some emotionally detached and objective common sense. The big but here is that you need to, as far as possible compare like with like so factor in the condition of the property as far as possible. Do not compare the price of a run-down repossession with that of a well-maintained family home two doors down. The BMV is calculated by simply working out the discount over the market value, so a house sold for £90,000 that could be sold for £100,000 on the open market is 10% BMV. Why would anyone sell BMV? That is for another time but suffice to say the vendor is more motivated by the speed and certainty of the sale than the sale price. Why is BMV important? Well firstly it gives you instant equity in the property, so you are now a proper investor. Maybe more importantly, it reduces your risk. So, for instance, if there is a change in circumstances with the house, personally, financially, in legislation or any other factor, you have an exit strategy even if prices have dropped slightly. If you are managing risk, you are now properly in business. BMV concerns the capital and equity of the purchase, the other three indicators all concern the ongoing financial viability of the investment. If you are buying to let, then we would always advise planning to hold the property for at least a few years because otherwise, the transaction costs will eat up a considerable proportion of your profit.