With both intrepid hosts currently traveling, we decided to re-release an oldie but a goodie that goes in-depth on our business model: buying value-add multi-family complexes. Ah, we’ve come so far from this early release!
What do we look for in a value-add property? How one shows potential and shows it’s not being maximized; how to approach the upgrades; and how to approach changing operations, expenses, and the market. Renovations are a key component, but not the only one.
We also get into a few discussions about some terms and a few stories of personal experience with exactly the kind of things we look for in apartment complexes to invest in. It’s an all-new Get Invested.
Get Invested is also available on Spotify, Apple, and YouTube.
Get your copy of the “Beginner’s Guide to Real Estate Investing”!
Key Takeaways
Ways to Add Value
a. Operations: management competences and expense efficiency.
b. Renovation: improve and prettify.
c. Stabilization: hold improvements and revenue increases steady.
Target underperforming assets: in order to add value, there must be a value gap. Find assets whose potential is not being utilized.
Renovations
a. Cost-benefit analysis: does the rent increase justify the construction cost?
b. What level of renovation does the market support?
c. Good flooring can really turn a place around.
Sometimes you just can’t fix ugly.
Topic and Time Breakdown
01:59 - Defining Value Add and Increasing Revenues
09:34 - Identifying Underperforming Properties
17:08 - The Importance of a New and Sharp Look
23:28 - Renovation Calculations and Target Level
25:44 - Calculating Renovations: Evaluating the Market and Income Threshold
27:04 - The Cost-Saving Benefits of Larger-Scale Renovations
27:29 - The Impact of Flooring on Apartment Value
31:25 - Adding Value by Cutting Expenses
42:49 - Refinancing: Stabilizing the Property for Increased Value
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