Multifamily Investors Plan to Add Value in the Pandemic

One way for savvy investors to make deals pencil out in a tough market is target assets where strong management can generate some upside.

Given current market conditions, some apartment investors are looking for a little something extra when they consider buying apartments.

They have recently been able to close deals to buy apartment properties, despite the chaos caused the spread of the novel coronavirus. But to make these deals work, these investors often need a plan to add value to the property. Simply buying and holding an income-producing asset is not enough.

Given current market conditions, some apartment investors are looking for a little something extra when they consider buying apartments.

They have recently been able to close deals to buy apartment properties, despite the chaos caused the spread of the novel coronavirus. But to make these deals work, these investors often need a plan to add value to the property. Simply buying and holding an income-producing asset is not enough.

That’s largely because of the risk of more job losses in the U.S. economy and an uncertain outlook on rent growth. Most buyers need some plan to raise the income from an apartment property to offset the risk of a slow economy.

The plan to increase the income from an apartment community doesn’t have to include extensive renovations, extra amenities or higher rents. Many investors plan to improve the operations or management of apartment properties to create new value.

“There is more downside risk than upside—buyers see that risk but also see some value-add,” says Sam Isaacson, president of Walker & Dunlop Investment Partners (WDIP), the investment management arm of Walker & Dunlop, managing three private equity funds that invests in multifamily properties.

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