Value-add Execution Risk Must Be Managed
The value-add acquisition strategy, which we employ, entails bringing an older property back to competitive prowess, simultaneously increasing it's income potential and providing a much better living environment for our customers (our tenants).
This strategy is not without risk, however. Namely execution risk.
Purchasing a community that may have 100-250 families and 200-650 people living there, must be handled thoughtfully on multiple levels.
On the economic level, the appropriate level of renovation must be established before acquisition and be based on the specific property and target customer. "Value-Add" does mean adding value to the asset but that is a consequence of first adding value to the customer. The definition of value-add is (or should be) something that your customer is willing to pay for...because they value it.
If you add an amenity that the target customer doesn't value, the end result is you don't get paid for it when you try to charge them. This means that money spent on those sorts of "value-adds" is actually just waste and an uncompensated subsidy to your customer. To this affect, our visual to communicate in visual form how we think about the process of adding value to our customers, and our assets.
Partnering with you in Excellence.
