Value-add commercial real estate investments typically target properties that have in-place cash flow, but seek to increase that cash flow over time by making improvements to or repositioning the property. This could include physical improvements to the asset that will allow it to command higher rents, increasing efforts to lease vacant space at the property to quality tenants, or improving the management of the property for higher customer satisfaction or lower operating expenses.

 

Raakel Real Estate manages this process from start to finish including, financial analysis, design, reports, permits as needed, and construction.  Once Raakel Real Estate has successfully increased the net operating income at the property, they typically advise clients to refinance or sell the asset to capture the resulting appreciation in value.  Owners often employ medium to high leverage to finance their projects and increase returns. Successful value-add projects typically generate higher financial returns to investors than core investments, due to the appreciation in value. However these project bear more risk since at the time of acquisition, the property is not operating at its full potential. It's oftentimes because the property is not fully leased; is leased at below market rents; has not been properly maintained; or is poorly managed. For many investors, however, value-add projects provide the perfect balance of risk vs. return—offering in-place cash flow at the time of acquisition with significant upside potential in the form of value appreciation.

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Raakel Real Estate is a licensed General Contractor in the State of California.