Which Kind of Real Estate Investor Are You?

Updated on September 8, 2020

There are many ways to invest in Commercial Real Estate. Private equity, real estate investment trusts (REITS), mutual funds to name a few. There are many types of real estate investments over several asset classes; shopping centers, strip malls, multifamily apartment buildings. Many styles of real estate investors. Many locations to choose from, etc.

Real estate investing can generate cash flow and a return on investment in many unique niches.

But ultimately, it comes down to two very distinct styles with investment properties.

  1. Buy and Hold
  2. Value Add

Buy and hold investors acquire real estate simply for the benefits of owning real estate. They purchase an asset, receive their rental income, and over time, due to simple economics (they aren’t making any more land), the asset’s value typically increases.

Due to real estate being such a tremendous asset class on its own, this is a viable strategy, and fortunes have been built this way.

The other strategy is Value Add. In my opinion, this takes all the great components of the buy and hold strategy, and “juices up” the rental property to another level. This is the predominant strategy we utilize in our private equity funds and syndicated transactions.

Value add is all about taking a building in its current state, and through a specific improvement plan, taking it to a state of higher value. It’s about taking the current net operating income on a building and increasing in a significant fashion.

The theory is simple, double the NOI of a building, and you’ll double the value of the asset. When you are talking about multi-million dollar transactions, large increases in NOI can mean a huge increase in net worth for all equity investors involved.

First National Realty Partners is one of the country’s leading private equity commercial real estate investment firms. With an intentional focus on finding world-class, multi-tenanted assets – including service-oriented retail shopping centers – well below intrinsic value, we seek to create superior long-term, risk-adjusted returns for our investors while creating strong economic assets for the communities we invest in. Whether you’re just getting started or searching for ways to diversify your portfolio, we’re here to help. If you’d like to learn more about our retail investment opportunities, contact us at (800) 605-4966 or send us an email at info@fnrpusa.com for more information.

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