Who is the end buyer of non-value-add apartments?

[Craig Peterson]

It seems like most everything I read or hear promotes a value-add strategy for multi family investments, regardless of the long term holding strategy (buy/hold, buy/sell, buy/refi, etc). Value-add from increasing NOI through various methods of increasing income (below market rents, rehab and increase rents, RUBS, etc) or decreasing expenses. With the same cap rate, and a higher NOI, the value of the building has been increased. My question is.... Once all the practical value-add opportunities have been taken advantage of, and one wants to sell their apartment, who is the end buyer that is interested in a non-value-add apartment complex? Thanks!

[Anthony Gayden]

@Craig Peterson

People with not a lot of time who like the higher returns, cash flow, tax benefits, debt pay down, appreciation, and control, but don't want to do a rehab.

It's true the returns are lower this way but you don't have to spend a lot of time looking for off market deals, you don't have to go through extensive renovations and tenant turnover, and you have cash flow from the beginning. 

There are also areas of the country you can bank on appreciation and rent growth even if you do no improvements and the property isn't distressed.