From the course: Real Estate Analysis Foundations
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Value-added investment strategy - Microsoft Excel Tutorial
From the course: Real Estate Analysis Foundations
Value-added investment strategy
- The third investment strategy we're going to look at is called value added, and as you might be able to guess, it falls somewhere in between the opportunistic and core-investment strategies. It's a strategy that aims to balance risk with the rewards. So the key goal for a value-added investment strategy is to retain some potential for upside, but still have some initial cash flow. These types of investments tend to also have low to moderate leverage, and they will have light to moderate renovations. You're not going to see value added doing some major, major renovations. Those would fall in the opportunistic category. So some value-added types of investments could be cosmetic-type of upgrading. So what some folks in the industry would call putting lipstick on a pig in order to try to achieve higher rents. Or there may be something where there's an issue that is easy to fix that would increase occupancy. Or maybe an operating asset, for example, it could be a self-storage facility…
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