Introduction: Feeling overwhelmed by property choices?
As a property investor, you’ve probably encountered an overwhelming number of options.
One of the most common questions we hear is:
“Should I focus on new builds, second-hand properties, or below market value (BMV) deals?”
It’s a classic dilemma, but one that often leads to paralysis by analysis.
Here’s the truth: The right asset doesn’t matter as much as the right strategy.
In this article, we’ll explore why property type is secondary to strategy and how focusing on the bigger picture will help you make better investment decisions. Whether you’re buying a new build, second-hand property, or BMV deal, it’s your strategy that will determine long-term success.
Why the strategy matters more than the property type
The property type debate often clouds what’s really important: the strategy behind your investment. Investors tend to obsess over whether a property is a new build, second-hand, or BMV, but this doesn’t determine the success of your investment.
Let’s take a deeper look at why this is:
- New builds, while often marketed as low-maintenance and high-demand, can sometimes be priced higher than actual market value by selling agents or developers.
- Second-hand properties offer opportunities to add value, but they come with additional risks and renovation costs.
- BMV properties sound like a bargain, but there can be hidden costs, low quality, and major issues masked behind clever marketing, leading to challenges that could reduce your return or create issues with your exit strategy.
Ultimately, what matters is how each property fits into your overall strategy and whether it aligns with your financial goals and risk tolerance.
New builds: The benefits of modernity but know the risks
New builds are often seen as the safe bet for investors: modern, low-maintenance, and energy-efficient. They’re promoted as the ideal choice for investors seeking reliable returns and minimal work.
However, here’s the key point: New builds aren’t always the bargain they seem.
Investors could pay a premium if they buy reactively, based on a glossy brochure or a clever email marketing campaign designed to emphasize the perks of a property, without addressing the full picture.
What you need to consider when investing in new builds:
Pricing strategy: The price of new builds can sometimes be inflated by developers or agents, and while they may be new, they’re not necessarily the best investment in terms of short to medium-term growth. Also, depending on the amenities, facilities, and building insurance, the net rental yields may fall short.
This is where many investors make a mistake - they equate price with value. Just because a property is priced higher or lower doesn’t mean it’s a better investment. Price is not the sole factor; always ensure you’re comparing apples with apples, not just price tags.
New builds can be a fantastic investment in the right location once all the fundamentals are considered thoroughly, with a clear strategy based on your goals. But always ensure you’re paying the right price for the location and don’t take the sales agent’s word for it. It’s important to make informed decisions rather than simply following what's promoted.
Second-hand properties: The hidden gems with the right approach
Second-hand properties (or resale properties) often get overlooked by investors chasing the shiny appeal of new builds. But consider this: If the investment is really good and already held by another investor, why would they sell it?
If it’s being sold by an owner-occupier, is the price objectively set — or based on the seller's emotional need to cash out for their next home?
Make sure you do your due diligence and understand why the seller is selling. Look behind the surface reasons to be convinced that you’re buying great value in terms of fundamentals, price, and quality.
You might find a second-hand property in a great area at a fantastic price, or something that may need a bit of cosmetic work. If it meets the investment fundamentals, you could be ticking the right boxes for long-term success.
But be careful. If you want to be a hands-off investor and are approached by an agent or contractor offering a ‘great BRR deal’, proceed with caution.
It’s essential to understand the full scope of work, including whether the property needs complex renovations or structural repairs. Without industry expertise, these projects can quickly become unviable, and you could find yourself committed to a deal that’s hard to reverse.
Since COVID, the material and labour market has made many BRR or flip projects for hands-off investors, who appoint contractors, largely unviable. Be sure to assess whether a BRR project fits your long-term plan, rather than being swayed by a seemingly good deal.
Additionally, knowing what value to add is essential. For example, in London, having a garage or parking space adds more value than high-end bathrooms or kitchens. If you’re not a developer or don’t work in the trades, be very cautious. Most BRR deals that seem too good to be true are often more beneficial to the person who brought you the deal, not you.
Therefore, second-hand properties require careful planning and strategic investments. Without the right expertise, renovations and repairs can become costly, so it’s important to evaluate each property’s true potential before making a decision.
Below Market Value (BMV): The temptation of a deal but buyer beware
BMV properties are often presented as the ultimate bargain. Buying below market value can seem like the perfect deal. However, there’s a reason the price is low.
BMV properties often come with hidden risks, and investors need to do their due diligence:
- Why is it priced low? It could be due to underlying structural issues, location challenges, or legal complications.
- Renovation costs: While some BMV properties can offer instant equity, they often require extensive work to bring them up to standard, and these costs can quickly erode profits.
- Market risks: BMV properties are often in areas where market demand is low or declining. This could make it harder to sell or rent the property in the future.
When investing in BMV properties, it’s crucial to understand the full picture:
- Get an independent valuation.
- Understand the costs of repairs and improvements.
- Ensure your exit strategy is well planned and feasible.
You may also find some new builds online labelled as below market value. Be cautious, as this is often misleading. If an agent or developer has a desirable property in a high-demand area, why would they need to sell it below market value?
In reality, these deals are often priced above their actual market value to account for the incentives offered, meaning you’re essentially paying for them anyway despite the compelling narratives the selling agent may present.
From our experience, where investors begrudgingly paid a fair value, their investments outperformed in the medium to long term compared to investors who thought they’d got a “deal”, because they got that deal for a very good reason.
Why the strategy is the real differentiator
The bottom line: it’s not about the property type - it’s about how the property fits into your investment strategy.
At Ethira Property Group, we don’t start with the property. We start with your strategy.
We work with you to understand your:
- Financial goals for the next 5 and 10 years.
- Risk tolerance and investment preferences.
- Long-term strategy for portfolio growth.
- Level of involvement: Whether you prefer to be hands-on or hands-off with your investments.
By aligning your investments with your goals, we help you select the right property based on location, growth potential, and long-term income sustainability.
Conclusion: Focus on strategy, not asset types
In the end, the key to successful property investing isn’t about which property type you choose.
It’s about having a clear, strategic approach that aligns with your long-term goals.
At Ethira Property Group, we help you navigate the complexities of property investment.
Whether you’re exploring new builds, second-hand properties, BRR, or BMV deals, we ensure your investments are aligned with your overall financial goals, helping you build sustainable wealth for the long term.
Looking for more guidance on property investment mistakes?
If you’re seeking to refine your strategy or ensure your investments are aligned with your goals, download our free guide on the 7 Worst Buy-to-Let Mistakes and discover how to avoid the most common pitfalls in property investment.
Download the "7 Worst Buy-to-Let Mistakes" e-guide here
Inside, you’ll find actionable insights that can help you build a more informed, strategic portfolio and avoid costly errors that could hold you back in the long run.
Once you’ve reviewed the guide, contact us to discuss how we can help you strategically position your investments for long-term success.
If you’re ready to talk about your property goals and strategy, book a free consultation with one of our expert advisers today.
This article is for educational purposes only and does not constitute financial advice.