PASSIVELY INVESTING IN VALUE ADD MULTIFAMILY

[Jorge Abreu]

• What is the Business Plan for the Value Add?
• Who is on the Deal Sponsor team?
  • Does anyone have Construction Experience?
• How much of your Capex Budget is for Upgrades vs Deferred Maintenance?
  • You want to make sure some upgrades are being done and it's not just deferred maintenance.
• Who will manage the renovations?
  • Even if a GC will be hired who will be his point of contact on the Sponsor Team
• Who is doing the work?
  • General Contractor, Property Manager or someone on the Deal Team is going to hire subs?
• Details about whoever it is that's going to handle it.

[Mike Krieg]

@Jorge Abreu Lot's of good questions. Generally on a Value-add deal we're investing 5-7k into each of the units over 18-24 months. The goal is to achieve market or premium rents if we're "making the market". The GP teams sometimes have construction experience and that helps a lot. Or the management company can have a construction division. We have one management co that has a construction division and saves us huge on materials. The GP always manages the GC on construction in my exp. But it depends on the team and their approach.