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Ciminelli has always been active in the real estate market, making key investments and realizing opportunities when they arise. Investing in real estate can take many forms, but given Ciminelli’s full service commercial real estate platform, the value-add approach has proven to be successful. Our skills in property and asset management, and brokerage set our team apart from other investors and help our team identify unique opportunities.
The value-add investment strategy is a real estate investment approach that involves acquiring properties with the intention of making improvements that will increase the property’s value over time. This strategy requires exceptionally active management and in-depth market knowledge applied in combination to enhance the property’s income generation and overall appeal to tenants or buyers. Here are the basics of the value-add investment strategy:
Once a property has gained value through careful management, which can take several years, investors will look to capitalize on their investment through a sale, refinance, or simply by holding the property long-term. Whatever the strategy, the intention is always to capture the increased value resulting from the improvements made to the property.
The value-add strategy is popular among many investors because it offers the potential for higher returns compared to more passive investment strategies. However, it’s important to note that the strategy also comes with higher risk due to the need for successful execution of improvements, sound management practices, and an intimate understanding of market trends. As any real estate professional will tell you, the factors that affect value are numerous. Economic conditions, construction and materials costs, tenant sentiment, and more can all create a less than ideal scenario for your investment portfolio. Holding the property for a period of years and keeping your timeline flexible can help insulate investors from these types of market conditions.
In summary, the value-add investment strategy involves purchasing properties with the intention of making improvements to increase their value and income potential. This strategy requires active management, careful planning, and a solid understanding of the local real estate market dynamics.