Implementing a value-add or a repositioning strategy may seem easy, but it is not.
It requires a lot of preparation, as well as a thorough strategy implementation to be successful.
If you do not work with the right partners or dedicate enough time, you will not achieve your goals and the performance of the assets will quickly go south.
At first, you have to properly assess local market conditions. It is not lucrative to invest too much money in a property to reposition if the market does not support higher rents. The same is true for any rehab strategy.
Once you have determined the rent flexibility, you have to properly define the scope of work, decide on the capex amount needed to achieve it, and select the right contractors.
At the same time, you want to negotiate the best loan that supports your investment strategy and start implementing it as soon as possible to avoid losing momentum.
In terms of holding periods, some investors focus on long term superior yielding properties and others are more favorable to short term IRR based investments. Both strategies make sense and we have no preference. However, we believe that a good IRR deal needs to have a yield plan B in case the market is not positive at the time of the planed exit. We also believe that there is no reason to hold on a yield deal if its value has increased so much that it becomes a very nice and successful IRR deal. Here more than anywhere, the response belongs to the investors or the limited partners.