Simply put a value add real estate investment is one strategy where a real estate investor attempts to be a problem solver. They seek out under performing real estate assets with the intentions of correcting one or multiple problems facing the property. Typically, on a true value add play there will be many issues that will need to be addressed and will run the gamut in complexity, effort and time required to remedy.
Most challenges can be grouped into physical, functional , operational and financial categories. Perhaps a previous owner over leveraged a property and the loss of a tenant(s) and their rent revenue created a downward spiral where maintenance issues were not addressed and a domino effect was started. Maybe a well located apartment complex is lacking key amenities and updates that residents expect and are willing to pay for in today’s market place. Or maybe an effective leasing and management program is not being executed, causing a property to experience lost top line revenue and inflated operating expenses.
These are just a few examples of countless problems that might make a property a viable candidate for a value add real estate strategy. By correctly identifying and addressing the issues at hand, a real estate investor is more than likely seeking to realize larger returns than one anticipates on a stabilized asset. But typically this is a trade off, as the value add real estate investor will be assuming a great amount of risk in this venture. If you are interested in executing a value add real estate strategy, make sure to find a knowledgeable team of commercial advisors who can assist you. You will want a team who can leverage their experiences to identify, evaluate and execute on value add real estate opportunities. If you’d like more information on this, feel free to give me a call at 850-913-9133 or leave a comment in the section below.
About Kevin Wattenbarger – As a founding advisor of the SVN office in Panama City, Kevin has extensive knowledge and experience in the regional market. He specializes in the sales and leasing of retail, office, industrial properties and commercial land. Click here to view his full profile and listings, or to contact him, you can call him at 850-532-5454, or email him at [email protected] You can follow him on Twitter at @NWFLCommercial.