Taking on a Multifamily Property in need of Improvement can Bring Generous Returns
Whether you are looking for your first multifamily investment, or you’re looking to diversify your portfolio, a value add property can be a smart choice for a real estate investor. While they are viewed as a more risky investment, value add properties can bring a great return if you choose wisely. Keep reading to learn why you should consider them for your property portfolio.
Greater Risk, Greater Reward
Core investments — stabilized properties, usually in a desirable location with quality tenants — can offer a safe, reliable return. But if you are willing to take on more risk with your money, you can reap the benefits of investing in a value add property — one that requires physical improvements, and/or exhibits management or operational problems. The level of improvements needed to secure a good return can vary greatly from property to property, so be sure to complete a detailed analysis during your due diligence.
Many Ways to Add Value
Alongside making large physical improvements, there are many other ways an investor can secure great returns from a value add property. There may be operational or management issues affecting the property like below market rent rates, or it may just be in need of some cosmetic improvements. Also, be sure to complete a utilities audit to see if there are expenses that can be lowered, and check that the current rent rates are in line with the market. By making these changes and resolving any issues, you will be in a strong position to attract new and higher quality tenants, improve the retention rate of existing tenants, and generating higher income.
Other Investors May Not Spot Them
Some properties with value add opportunity may not stand out — in some cases, only seasoned investors will be able to spot them. With a little research and due diligence, you can find a lucrative opportunity that others might miss. To help in your search, consider working with a multifamily real estate expert who can perform a detailed analysis of available properties. They can also let you know as soon as a good opportunity hits the market.
Value add properties are a great choice if you’re looking for a generous return on your investment. If you need help finding the right multifamily property, the specialized team at 100Units.com is here to help. We take the time to evaluate your investment goals to help you attain the long-term success and results you want. Contact us today to find the perfect multifamily value add property.