DiversyFund Talks About Why Multifamily Value-Add is a Great Real Estate Investment Strategy
by Arina Smith Real Estate 21 February 2019
Multifamily value-add is a modality in the real-estate world in which you buy a property—most likely an apartment building—renovate the property and then raise the rents. Occupancy in apartments is at an all-time high as more and more people move closer to their jobs in urban areas.
DiversyFund, a company that is on a mission to disrupt traditional alternative asset investing and empower the average investor by giving them the same wealth-building opportunities available to the 1%, explains below why investing in a multifamily value-add could be a great investment strategy for you.
Multifamily value-add real estate is a goldmine for investors looking to put in the work to improve home value by buying a fixer-upper. A value-add property is essentially a building that can use renovations and upgrades. By improving the condition of the multifamily property, the investor can ask for higher rent from tenants as well as lower operating and repair costs, thereby adding value to the property.
In a volatile political and economic climate, multifamily real estate is an especially lucrative commodity to hold. In times of unpredictability, people are far more likely to rent rather than buy. In addition to having the relative stability of occupancy, there is also that added benefit of having appreciating property.
When searching for a multifamily property to invest in, one key factor to consider is the current occupancy of the building. Look for an occupancy rate of 50-80%. At this percentage, you have a reasonable ability to ascertain the probability of future growth. While assessing the property, be sure to note the renovations that need to be done to add value. These renovations can involve things like updating an old staircase, fixing up the lobby, improving the parking lot, landscaping the exterior of the building, etc.
Once the property is renovated and the reason behind the lower rate of occupancy is resolved, you can increase the rents of the building. Especially among the younger millennial generation, trendy and well-maintained multifamily real estate is in high demand.
With the urbanization of jobs and increasing movement of people from rural areas to the cities, multifamily property and the value-add they offer are becoming more and more lucrative for those interested in real estate investments. Ultimately, as the population grows, people will look to live in apartment buildings rather than free-standing homes. Investing in a multifamily value-add is a lucrative investment now and will continue to have profitable surges in the future.
The wealthy have been building wealth by focusing on high quality, top tier commercial assets. But it requires connections and a huge investment to get in these multi-million dollar deals. That’s where DiversyFund comes into play.
DiversyFund’s platform opens up commercial multifamily assets to regular investors. It aggregates investor funds to get you invested in multi-million dollar real estate assets. Here’s how it works:
- Individuals can invest online through our portal with a low minimum of $2,500
- The fund will purchase several cash-flowing, multi-family assets.
- The fund will then renovate the units and increase the rents and the cash flows, which immediately increases the building’s value.
- We wait and let the assets further appreciate so we can sell them at a maximum profit and then split the profits among our investors.
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