Multifamily Investors Need to Get More Strategic About Value-Add Plays

A good sub-market for a value-add play should show a difference of several hundred dollars between the cost of renting a new, luxury apartment and the cost of renting an older unit.

Multifamily investors continue to be eager to purchase value-add apartment assets. The challenge is to find the right property.

“Many of the easy deals already have been done,” says Greg Willett, chief economist for Richardson, Texas-based RealPage Inc., a provider of property management software and services.

For several years, value-add investment has been a hot trend for apartment building buyers. Many older apartment properties have already been bought and at least partially renovated to earn more income. Also, more investors have become interested in renovating older apartment buildings, increasing the competition to buy these properties...