Investor Series – Value Add
April 15, 2023
This is one of many articles we will be writing regarding investing in Real Estate. Today we’ll be looking at something called “Value Add”. What is it? How does it work?
Value Add is a common term in the investment lexicon and simply means an opportunity on an investment property to add value to the property through various means. For example, let’s say you bought a single family home with a full, unfinished basement. A possible value add would be to finish the basement in the future. Maybe with a rec room bath, and a bedroom (adding in an egress window). This would cost money but the additional value to the property would be greater and you create a bigger rent opportunity with the additional bedroom.
There are many different ways you can add value to a property. Sometimes just repairing it or updating it can add value. Additions and improvements can also add value. A conversion can sometimes add value as well, going from a duplex to a single family or vice-versa depending on the market and logistics of the property. Many investors target properties that have value add opportunities.
