Our business model is very much like flipping a house.
We buy an apartment complex, incrase its value and then sell for a profit.
But how do we add value to an apartment complex?
We add value to the property by doing something we call “Forced Appreciation.”
Forced appreciation occurs in multifamily assets when you increase the income and/or decrease the expenses.
The more Net Operating Income (NOI) a multifamily asset produces the higher the price of the asset itself.
In practical terms we “force” this appreciation by increasing the rents for each unit.
Generally speaking, we do this by:
- Rebranding the property and aggressively marketing it
- Extensively renovating the exterior of the property
- Landscaping
- Painting
- Building facades
- Improving property management / leasing operations
- Etc
- Renovating or adding common areas
- Lounges
- Dog parks
- BBQ areas
- Pools
- Etc
- Renovating the individual units themselves
- Adding washers, dryers, and dishwashers
- Much more…
On the expenses side of the balance sheet we reduce costs by:
- Implementing a strategic preventative maintenance plan
- Renegotiating maintenance contracts
- Going green
- Installing “low flow” toilets and sinks
- Replacing light bulbs with LED bulbs
- Updating old appliances
- Much more…
Satch Bernhardt
V1 Capital
