What is a value-add deal?
In a value-add deal, the buyer is looking for a way to increase the property’s profitability. It can be done by applying any of these methods: 1. Renovating the amenities, property exterior or units and increasing rents.
What is a value-add acquisition?
Value add deals are those in which the transaction’s sponsor makes an active effort to elevate the income stream of the property, typically through a significant capital improvement program such as a partial or property-wide renovation.
What type of investment strategy would a company be choosing if they are considered value-add?
Value-add strategies usually involve choosing a property with at least one significant problem that could be solved, such as: A physically outdated building. A need for significant capital improvements. Below-market rents.