So Cal "Value Play"

[Steve Veen]

I have been reading up a lot about apartment investing via a value play. I was just wondering if the current up-swing market supports value play investing or is it better right after a price correction period? Specifically, I'm located in Southern California and want to know if this option is available locally here. How many of you are currently involved in this type of investment? And how long is the typical turnaround on a project. 1 to 2 years? Or is it more like five years? Thanks, Steve

[Joel Owens]

Value play multifamily most of that happens 2 to 4 years ago in most markets. Most sellers are selling off the stabilized assets now for great caps to buy and hold investors. They will still leave  a little meat on the bone to sweeten the pot for the holding investor.

Lot's of money now chasing what little value add is left for multifamily.

[Josh Prince]

Hi @Steve Veen - when you say value play, does that mean increasing the value of the investment by your actions, like running it more efficiently, raising rents, etc?  If that is what you mean, then that that is what I do. I look for buildings that are being run inefficiently, or are available at what I think it is a low price based on their potential income or ultimate sale price.  

I have only done a few, but instead of selling, I have just borrowed against the buildings.  They end up being 100%+ leveraged based on the initial selling price and cash investment.  To sell them now would only net a small amount, so I keep them. These are all rent controlled buildings and it has taken about 2 years average to stabilize them at the higher value.

I think there are better deals after a price correction drop - e.g., 2009-2011 and I made a number of purchases then.  You get the benefit of the market jump when it comes back up 

But I have also found deals in the current market, where there was an information inefficiency in the market and it wasn't clear what a good deal it was to the average observer. 

[Steve Veen]

@Joel Owens   

@Josh Prince 

Thanks for the info. 

Josh, yes, that is what I meant by value play. 

Anyone else working niche areas of So Cal where there are MF properties that still would fall into this scenario? I'm looking to possibly partner up or invest in a syndication where the lead wouldn't mind doing a little mentorship. 

Thanks,

Steve