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If you’re in the market to purchase real estate you’ve probably heard the term “value add property”. A value add property is the idea of purchasing a building or other piece or real estate with the idea of renovating or redeveloping the unit to bring it to a higher price point. It’s often considered a higher risk investment, but can often have a high pay off!
Value add opportunities come from increasing revenue and lowering expenses to see a value gain based on increased net operating income. Real estate companies typically purchase, develop, and restore the property, while an individual will try to repair the property for “better” user.
Improvements to a value add property will often lead to turning the property into a different type of building. For example, bringing in potential tenants, which can lead to high occupancy rates, increased rental prices, and even reduced expenses.
A value add property is considered a mid to high risk opportunity. There are a few factors that contribute to this high risk factor.
If you are interested in making a profit by purchasing a property, it is important to keep the above risks in mind. There are also a few things to consider that will help you be successful in your endeavor as well.
Hire the best restoration company around. At A&J Property Restoration, we can take care of the restoration and construction details needed to bring your commercial building vision to life. Call us today for more information, and to see exactly what we can do for your new construction project.