This is a hard one. There are four investment strategies core, core plus, value add and opportunistic.
Core investing means little to no asset management. This means investing super passively in properties with credit tenants and with long term leases. These investments are typically located in the most expensive parts of the city where people want to be and are new. This is a good investment strategy for people that are retired and want consistent income with little fluctuations.
Core Plus investments means some asset management. This is a semi passive investment where a property requires light repairs such as carpet and paint to bring it up to speed. It is not the newest and greatest asset but it is in a good area and not too old. Maybe 10-15 years. This investment strategy is for folks looking for income and some appreciation. They are about 5-10 years from needing investment income in retirement or other life stages.
Value add investments are those where the property may need heavy renovation and tenant turnover. In some cases it could be a reposition of the asset. Such as a renovation and rebrand. It could be C to B or even B to A class. Both options are difficult but the latter is much more expensive, but could be worth it depending on the market rents. This is a great strategy for investors focused on capital appreciation with cashflow as a secondary benefit if available at all.
Opportunistic is building a new property or converting an existing property to a new use. This is very expensive and carries the highest risk. When you are building new you deal with construction, market and time risks. However, you also add entitlement risk to the mix. Entitlements are the approvals necessary to start construction. These approvals could take months or years in some places. This is primarily for investors looking for capital appreciation and are not concerned with cash flow in the medium term saying 3-5 years or more.
My name is Denny Troncoso and I am a real estate syndicator and mortgage broker NMLS 388985. I hold a masters in real estate degree from the University of Central Florida and have acquired millions of investments in Florida with investors. For fun I read and spend time with my wife Dessiree and son Lorenzo. If you would like to learn how to invest in my next investment opportunity or need a house, investment real estate or business loan contact me at info@cosocapitalgroup.com. Look forward to speaking with you.
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