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Have you ever heard of value-add real estate?

This is a concept you need to know before going any further on your investment journey.


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What Value-Add Real Estate Is and Why You Need to Know About It

Value-add real estate is a property that has existing income, but requires some improvements to provide good returns.

This property may be a bit run-down and in need of renovation, or perhaps it’s been poorly managed and the rents haven’t been raised in years – but it has potential.

So, value-add deals are properties that have problems, but they are problems that I feel confident I can fix.

With a few upgrades, we can attract tenants, charge more rent, and increase the property’s net operating income (NOI).

I tend to look for value-add deals because that's how we can build the most wealth in the shortest amount of time.

By renovating the building and filling up the units, you increase the value of the building substantially. When you finally sell the building, you have created so much profit that the overall return of the investment is fantastic.

The value add real estate strategy is one of the best strategies for experienced investors, or those just starting out. It provides an increasing cash flow through rental income and a good return on investment upon sale. To understand my value-add strategy, imagine there are two apartment buildings of similar size and circumstance located in the same neighborhood, one valued at $2M and the other at $2.5M.

Our business model involves finding the $2M property and making changes that increase the amount of revenue it generates. Most commonly, this involves renovating the units, adding amenities and improving curb appeal—which allows us to raise rents.

Increasing our overall income increases the value of the property, making it worth $2.5M, just like the building down the street.

Now we can either sell it for a profit OR do a cash-out refinance. The beauty of the second option is that it allows us to return the investor’s principal while they continue to get checks in the mail based on the building’s cashflow.

There are numerous distressed rental properties out there, sitting just the right balance between risk and reward.

You can increase the equity in these building significantly through strategic renovations, like an update to the central heating and air system, replacing old wiring or plumbing, or even improving the curb appeal, and the rewards will be great.

These value-add properties are the kind of properties I look for and that I advise that you look for also.

That's because value-add deals are one of the best ways to achieve the desired returns for you and your investors.

In short, value-add apartment building deals are one of the best ways to build wealth in the shortest period of time.

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