We will not want to sell in a down market. If the value-add renovations are completed and the property is stabilized in a down market; we will continue to pay the preferred returns and hold the property until the market has improved. If the business plan calls for a long-term hold; we will refinance the bridge loan with long-term, fixed rate debt.
One of the benefits of investing in value-add class C/B housing, is the consistency of vacancy rates through a downturn. Someone who has lost their high paying job and currently living in a class A building will be looking for class C/B housing while your current tenants are still class C/B tenants. The demand for affordable, workforce housing only increases during a downturn.