The Azucena Take: Creating Value Through Investment Real Estate

What makes investment real estate ideal compared to other investment ventures? Investors have the potential to create value with real estate. It's one of the few ventures in which one can leverage their expertise to create value with property.

Before you start rage typing "stocks" or "tech startup" in the comments, remember that you're not Warren Buffet or Peter Thiel (let's be realistic). Real estate allows you to take something and create value from it based on your knowledge and resources.

This is a look at the many ways how investors can create value with commercial real estate.

Value from Real Estate

There are three ways an investor can create value through real estate. Here is the breakdown of all three methods: 

Repositioning: This is the most common and easiest way to add value to a property. All one has to do is make some changes like repainting the units or overall property, adding new flooring, and upgrading the appliances just to list a few. Or it could be something complex like converting a 3 bedroom unit into a 2 bedroom and 1 bedroom unit. 

Management: A more complex method that requires an investor to overhaul how the property is operated. This includes the new owner setting the rent based on the market rate or working to bring in new tenants. Other methods include handing off management responsibility to a third party (if the property is large or the investor has a portfolio).

Knowledge: We live in an age of information, thus it makes sense to use it. Investors will look to correct market inefficiencies with the property using their knowledge of the market. This includes marketing to a growing demographic, positioning the property to suit employees of a major company, or working to become part of a changing community. 

Regardless of how an investor wants to add value - it will still require time capital, research, a sense of nuance, and ingenuity. It all comes down to the unique or unorthodox approach an investor takes.

What it Means for Investors?

The big takeaway for investors is that real estate is one of the few ventures that gives you more control. Nothing is ever guaranteed but in real estate, one could at least stack the odds in their favor. To better understand how one could add value to their property, speak to an expert who understands real estate or the market. 

The Azucena Take provides an inside look into the investment real estate market using the research done and data collected by Marcus & Millichap