THE “NEW-ISH” INVESTMENT STRATEGY

Dana on April 1, 2020

new-ish investment strategynew-ish investment strategy

Rather than sitting and waiting for an increase in multifamily asset inventory, a not-so-new trend has come into play.

We’ve seen this trend before, notably back in 2015 and 2016, during the pinnacle of new construction.  Older assets had to compete with the brand new, modern (at that time) inventory, so “new-ish” assets became more attractive and feasible for investors.  

It is a very similar scenario now due to the availability of inventory, the cost of deals, and the availability of capital to spend.

The “New-ish” Investment Strategy Broken Down

Capital expenditure and deferred maintenance costs are driven by the age of the asset.  These “newer” assets are becoming more attractive because they more-than-likely do not need a large outlay of funds for renovating or stabilizing.  Investors are contemplating taking, for example, a community built in 2016 and employing a different value-add strategy. 

Rapidly Changing Trends

We’ve noticed that interior and exterior design trends are changing at a rapid pace.  Back in the 1980’s and 1990’s, a trend would hold its course for a much longer time frame than the two to three years we are seeing these days.  

modern kitchen as part of the new-ish investment strategy

Typically, upgrades such as washer and dryer connections, package lockers, keyless entry, and hard surfaces are already in the units.  The new owner would not need to do too much aside from bring it up-to-date with the current trends.  

How Adivo Value-Adds a “New-ish” Asset

As mentioned above, we would consider the following specifications when adding value to a “new-ish” property:

  • Create and install on-trend kitchen and bathroom cabinet doors and drawer fronts.  Having our own custom build facility allows us to update the current cabinets, including matching side panels, trims, frames, and kickboards
  • Add an updated appliance package
  • Update lighting and plumbing fixtures
  • Swap out the granite counter tops for quartz
  • Add a fresh coat of paint

Have you been looking at “new-ish” assets to add to your portfolio?  We would love the opportunity to speak with you and plan out the best scope of work for your new acquisitions!

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