Most Popular Ways to Value-Add to Real Estate Investment Properties
/The added value of the property is that differentiating factor that will help you to highlight the properties you sell. In such a competitive market you need to know what it is and how to present that plus that your offer has. So, if you are looking to shine in your real estate business, you should read all the way to the end.
A value-add property is an investment that gives investors the chance to boost an asset's cash flow through upgrades, rebranding, or putting together a strong management team. Such investment properties may be dilapidated because of negligence on the part of the owners or a lack of funds for repairs. Investors can acquire these properties at a discount to market value, and then can improve them structurally, physically and operationally. This will increase rents, attract more tenants and reduce vacancy rates.
So what are some of the most popular ways to add value to real estate investment properties? There are countless elements that can be optimized, but the most common could be summarized as property renovations, management restructuring, and marketing efforts.
Property Renovations
Interior and exterior renovations directly impact the emotional response of the potential buyer. From the moment they pull up, they want to see a well-kept exterior. On the interior, make sure you are making the most of the square footage by analyzing the floor plan. Look for areas that waste space and could be used to add a home office, which is more in demand than ever. A modern, updated kitchen is especially appealing to the new wave of first-time homebuyers. Increasingly, people tend to prefer open-concept plans for common areas, so see if knocking down some walls would work for the space. Remodeling the basement is one way to significantly increase living space. Tenants also highly value security features, such as a gated entrance, and additional amenities, such as a community pool or gym. Improving the appearance and functionality of a property makes a powerful impression and multiplies the value.
Management Restructuring
Management restructuring, a less apparent improvement at first to buyers, is one way to improve efficiency and thus operating costs. A good property manager will ensure that your property and its tenants continue to receive the maintenance and attention they require. He or she will see to it that the units are kept full, maximizing revenue. Finding a property manager you can trust also frees you up to invest in multiple other properties at the same time.
Marketing Efforts
As with practically any service or product, the perceived value has much to do with the way it is presented to the consumer. It’s all about highlighting the value that is there through professional photos, enticing ads, a curated pitch, and a professional buying experience from start to finish. You may consider taking advantage of a home staging service to allow viewers to project themselves in the space and see its potential. For multifamily properties, a solid marketing strategy could also include rebranding the complex with a fresh concept that people want to be a part of.
In summary, when investing in value-add real estate it is vital to ensure that you have the right team, an optimized property and effective marketing strategies in place to ensure that your value-add investment strategy is carried out correctly. With effective execution, value-add investing can be highly lucrative.
xx, Danae