Security and Profitability with Value-Add Strategy
Protecting capital in a market downturn is the foremost concern of investors. Multifamily investors have a unique advantage in managing downside risk. Net Operating Income (NOI) determines the value of a multifamily rental. Multifamily investors can increase NOI by making simple improvements in the property. Additional equity created by increasing NOI increases ROI and provides insurance against a market downturn. This strategy is called the value-add strategy.
Simple Value Additions
- Upgrading kitchen with new appliances, modern backsplash, and granite countertops
- Fresh exterior paint to improve curb appeal
- Covered parking
- Professional property management
- LED lighting and low-flow toilets to reduce utility expenses
Let’s look at an Example
Assume you purchased a multifamily rental which is valued as shown below:
You got a loan from the bank to purchase the property.
You made simple value additions to the property. Operating Income increased and the Operating Expense decreased by a modest 7% and 5%, respectively. The valuation post improvements are calculated in the table below.
Table shows how much money you would make if you sell the property after value addition.
Table below shows your ROI.
You don’t need Millions to Invest in Multifamily
Multifamily investing can make your dreams come true. But most of us don’t have enough money to buy a multifamily rental on our own. Apartment Syndication solves that problem. Passive Real Estate investing is the easiest and safest way to profit from Apartment Syndication.
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