How much value do you aim to add?

[Jordan Santiago]

Hey BP,

For those of you who are doing larger deals (50 units plus), how much value are you looking to add?

How much are you looking to raise rents to make it worth it? (100? 200)

How much are you aiming to increase the NOI?

Looking at a lot of deals per day just to sharpen my eyes and recognize a good deal when I see one. What numbers make it worth it for you? (CoC etc). Any input is appreciated, thank you!

[Jay Sloan]

First you need to analyze the surrounding area of your competing properties and determine what they are offering vs what your subject property is offering. Are you in the middle of rents? Bottom 20% of the market in comparison to comparable properties? Determine the rents in the market. A good indication of where you can position the property would be comparing it to the rents achieved in a comparable property where value has been added. Then it's just number crunching. How much rent are the competing properties getting in excess over yours? Determine that delta and then determine how much it will cost you to add the value needed to achieve those rents. The deduced projected NOI factoring debt and principal will be your expected return. As far as "what makes it worth it" is a question where the answer is specific to the investor. Different investors have different motivations and expected returns. Depending on the market, I would want at least 10% cash on cash.