Doing smaller value ad deals in high cap rate locations
Anyone here successful in the value ad model for smaller multis (2-8 Plex)? I'm in the Portland market trying to find value ad deals using my own capital with good success but finding this a slow way to scale. Anyone here doing this in California, Washington, Oregon, etc. where the cap rates are higher, deals are harder to find, etc.?
Low caps cut both ways - high value on the purchase but also high value on the exit. I invest in RE in LA where with buy and hold you'll never get the kind of cash on cash returns you'll get in cash flow markets, but done right your IRR will be much higher. I've done several types of novel fix and flips (completed projects in my BP profile). So I think you can certainly do well paying more for small MF on the west coast with tons of demand and very low supply. I think the hardest thing to navigate is actually tenant's rights and local restrictions so make sure you really understand what you are dealing with on that front before you start. The best risk reward I have personally found is on stabilized value add MF in growing midwest markets. Don't drink the cash flow kool-aid though, you can certainly invest and be successful in high priced markets.
