How to Buy an Investment Property Under Market Value in 2026
Buying under market value is possible, and I know because I did it. I purchased my first property $235,000 under market value, and the approach came down to four things: no competition, a bit of ignorance, a tight borrowing capacity, and actually taking action.
Why Buying Without Competition Changes Everything
The single biggest lever you can pull is removing competition from the equation entirely. If you are bidding at auction or making offers through a real estate agent alongside five other buyers, the price goes up. Simple as that.
The strategy I used was a letterbox drop. Not a generic flyer, but a fully addressed, professional letter sent directly to homeowners. I borrowed the approach from developers, who use it to secure land off-market with conditions like option contracts, extended settlements, and due diligence periods. Those tools exist because they make it easier for a seller to say yes without the hassle of a public campaign.
Here is the exact letter I sent:
Dear Homeowner,
I am sending you this letter in the hope that you might have been contemplating selling your property in the near future. As a first home buyer, I am very keen to negotiate with you, without engaging real estate agents and their hefty commissions. This is a serious and legitimate offer as I believe it will be a win / win for both of us, should we come to an agreement.
Please feel free to call me on my mobile number 0403191672 at any time.
Kind Regards,
Liam Whinfield
Short, trustworthy, no fluff. There was another developer putting similar flyers into letterboxes in the same street, and I believe the professional presentation of mine, combined with the fact I was a genuine first home buyer (not someone I invented, that was actually me), helped me get the call instead of them. The owner mentioned that detail specifically. I am not suggesting you pretend to be something you are not. I am saying that being genuine and presenting yourself clearly matters.
Why would a seller go off-market at all? Some people simply do not want twenty strangers walking through their home on a Saturday morning. Others are not chasing top dollar, for reasons of their own. In this case, the owner also did not fully understand what their property was worth, and that leads me to the next point.
How Ignorance (on Both Sides) Worked in My Favour
I know how this sounds. Ignorance as a strategy? Hear me out.
Before I made an offer, I had a hotspotting report done. The report indicated that a buy price in the area would cost roughly $292,000 on the low end (reno project) to $438,000. What I did not properly account for was that the data in that report was already out of date by the time I read it. The local market was in an aggressive growth phase, and under-offer prices are not disclosed publicly. Settlement dates also lag well behind contract dates, which means the figures on real estate websites can be a minimum of two months behind actual sales.
What I should have done was speak directly with a local real estate agent and ask what properties had actually sold for. If they would not give a specific number, I could have asked for a range. That kind of current sales data simply does not appear online in time to be useful. Because I did not do that, I went in with a lower expectation in my head for what the renovated property might be worth. In hindsight, a renovated three-bedroom home in that area would have been worth at least $400,000, with plenty of variables involved. Mine was a three by two that could be converted to a four by two, which is exactly what I did.
The seller's ignorance played a role too. They did not have a clear picture of their home's value either. They had run an automated valuation through a bank, which came back sitting between $390,000 and $410,000. They had spoken to an agent, but by their own account it was not a particularly sharp one. I bought the property for $385,000, which was already almost 100k above the low end buy price on the report.
In my view, if they had run a proper market campaign, they might have achieved above $450,000. I also pointed out that by going direct they would save on marketing costs and agent fees, which made the deal feel fair to them.
What Happens When Your Borrowing Capacity Actually Helps You
Here is one I did not expect to say: my limited borrowing capacity worked in my favour.
At the time, my buying power was capped at $380,000, constrained by my deposit. I could not have offered more even if I had wanted to. I did manage to save a little more over time and eventually purchased at $385,000, but the ceiling on what I could offer meant I was not tempted to push the number up to compete. That discipline, even if it came from circumstance rather than strategy, kept the price down.
It is a useful reminder that your borrowing capacity, whatever it is right now, shapes how you approach a negotiation. Understanding it clearly before you start is worth doing.
BIG BUT HERE. Just because you can borrow a million dollars does not mean you should spend a million. I should have worked out the numbers and the proper way to find market value. If I had a higher borrowing power I definitely could have over paid for the same property.
What Did the Numbers Look Like After Settlement?
Three months after settlement, I had a bank desktop valuation done on the property. It came back at $620,000.
A few things contributed to that figure. Before the broker submitted the valuation, I had updated the property information on Cotality to reflect that it was now a four by two, where it had previously been listed as a three by one.
A property in the same street had listed at $600,000, so the owner estimate submitted alongside the valuation was $620,000. Because it was a desktop valuation rather than a short-form or full valuation, the valuer did not need to inspect the property and worked from the updated information on file. Major banks can also be bullish on valuations in certain areas, so a result like this doesn't mean it will happen again.
Purchased at $385,000. Valued at $620,000 three months later. That is where the $235,000 figure comes from.
Should You Try This Approach?
This is not a guaranteed formula, and your situation will be different from mine. There are plenty of variables at play in any off-market purchase, and not every letterbox drop will result in a call. The seller's motivation, the timing, the area, and how you present yourself all factor in.
What I can say is that if I had not taken action, none of this would have happened. I am now four properties deep and counting. The letterbox drop cost me some time and money. The letters and delivering them took time itself, 4 weeks using 1 day to fold and close envelopes and another to go a deliver them myself. 8 days total over a 4 week period. Not bad, but it was tedious and now it's easier to use a quality buyers agent to keep scaling.
If you are thinking about trying something similar, or you want to talk through how your current borrowing capacity might shape your options, feel free to reach out. No pressure, just a conversation.
Disclaimer: This content is based on my personal experience and is provided for general information and educational purposes only. It does not constitute financial, credit, property, legal, tax or investment advice, and results are not guaranteed. Property values, borrowing capacity, lending policies, market conditions and individual circumstances vary. Any figures, valuations and outcomes mentioned are specific to my situation and should not be taken as indicative of what you may achieve. Before making any property or finance decision, consider obtaining advice from appropriately qualified professionals, including a licensed mortgage broker, accountant, solicitor or conveyancer, and property professional where relevant.