Value-add vs reposition

[Daniel Lozowy]

Hey BP,

I am in a market in Canada. Most of the investors here do the same thing, they buy apartments, get all the tenants out, make heavy renovations, rent out and re-finance or sell. It's coined 'optimization' here.

I am more interested in value-add projects, where I can go and improve management, push the rents a bit higher, update the units, and hold the building.

In my mind, those are two different kinds of strategies. With two different risks and return profiles. But when I try to present a project to someone, the first question is always: how are you going to throw the tenants out? or your return is low! I can get a 50% return on my flip! 

At this point I feel confused, I don't know if I am completely lost or if the kind of strategy I'm looking for is just unpopular here.