Real estate investors have requirements. They have different levels of return tolerance and needs. Due to the dynamic nature of real estate, there can be a lot of strategies through which you can make a profitable investment.
Core plus real estate is the perfect opportunity for investors to get a good investment return. If you are entering the market, then knowing these strategies will surely help you a lot.
What Is Real Estate Core Plus Investment?
It is a technique that minimizes the risk involved. This technique divides the investments into high-risk investments with great returns and low-risk low-risk ones with low returns. Usually, a core plus property is somewhere between 10 to 20 years old.
This property is usually in good condition. All that it needs are some minor adjustments and maintenance. The locations of these core plus properties are also perfect. However, to an investor, the risk profile of these properties is high and can expect a higher return on investment of about 8 to 12%. Core plus investments are not fit for people that can’t take high risks.
The Advantages
- Stability and consistency – The significant advantage of the real estate core plus investment is that these properties usually have good tenants. Good tenants are potentially long-term holders of the home. You can turn such homes into excellent and consistent income generators.
- Growth – Since all the core plus properties fall under the high-risk category. There is a high percentage chance of the value of these properties growing exponentially.
- Volume – You can continually improve the price of a core plus property by making minor upgrades to the property.
Different Types Of Investments?
Core plus real estate investment differs from other investment strategies like opportunistic, value-add, and core investments.
Opportunistic investment
This type of investment involves the highest risk but also carries the potential for the highest return. However, assessing the gains and the cash flow you can attain from such investments is very hard.
The primary reason for this unpredictability is the dynamic factors it depends on. For instance, opportunistic investment in real estate might require you to reposition the house, or you might perform significant upgrades to the house before you can have somebody living there on rent.
So, there are a few cases of such investments where the investors have to wait for years or months before they receive positive cash flow.
Value-add investments
Value-add real estate is usually in a good location. These locations can either have high or medium occupancy. In addition, there can be some amount of maintenance that these houses require to be habitable. These types have the potential to give a high return on moderate-risk investments.
The primary purpose of these investments is to get a house at a pretty good price and then invest some more money to increase its value exponentially. In addition, the renovations in these houses are done so that they attract tenants.
Conclusion
Real estate core plus investments are a perfect way to get a decent return. If you are new, gaining knowledge and experience with such strategies will help you grow and establish yourself as an investor. If you are unsure, you can take professional guidance. Experts will suggest the best course of action.
