Because the neighborhood is upscale, the house is located on a super nice forested walking path and creek, and the layout is right, we decided to offer a low bid and see what happens.

Also look at things that may be detractors, like the neighborhood, or awkward layout, or tight hallways that will make moving furniture difficult, etc.

If the site layout was very unique with parking, size of box non-standard, weird entry and exit access points, visibility levels,etc. then much harder to redo an existing space.The credit of the existing tenant comes into play, who is guaranteeing the lease, what starting rent they are paying,etc.

That covers things like ... it’s right beside a train track.... it’s 10 feet from a busy road and is noisy as hell inside, or maybe it’s so trashed inside that you just say this is a D level or below property or area.Is the layout functional, or is it messed up... like 8x8 foot bedrooms,, bizarre layouts, messed up construction where things slope that shouldn’t,  etc that you just say, “this property just doesn’t function well” how it’s laid out.  

Just last week I looked at a property and the layout was absolute crap with no way to fix it that makes sense on a ROI. 

Have you done a layout of the building and property on a piece of paper?

All of the homes are identical in layout/design and are pretty basic, but are solidly built with quality materials and appraise for $30k - $40k above the lot & construction expenses on average upon completion.  

I had the general layout already drawn and he was able to put it to scale and we worked together to come up with a few changes.

I like the updated layout in the kitchen it works much better than what you had before.

This trick is more for multifamily where your rent roll will be a bit more extensive, if you’re investing in strip centers or retail centers you may just have a few tenants on your rent roll and you don’t have as much move ins and outs so this may not work.But, if you’re looking at a multifamily rent roll, many times sellers or brokers will advertise a “proven” value add strategy by using the highest lease amount achieved for a certain layout.