PSA: Stop calling every deal 'value-add' when it's just basic maintenance

I had a borrower pitch me a 'value-add' deal last week that was literally just repainting the lobby and fixing the broken AC in a 30-year-old building. That's not value-add, that's deferred maintenance and it kills your exit cap projections. How do you guys define real value-add vs just catching up on stuff you should have fixed years ago?

2 comments

2 Comments

zarapalmer8d ago

Real value-add is when you actually change the income, not just the carpet.

walker.robert7d ago

Depends on the market, sometimes new carpet is all it takes to get an extra fifty bucks a month out of a place. But sure, go ahead and build that ADU if you want.