Value added properties may have the potential to expand the square footage by adding an extra bedroom. You can also create an additional dwelling unit that includes a small kitchenette and bathroom, which is perfect for an income producing unit.
Oftentimes, these properties require physical improvements and may be rundown due to owners lacking money to make the improvements. Landlords and investors could also decrease vacancy rate in a multi unit building or increase rent when there is a change in tenancy.
With the right physical upgrades, management, and effective marketing strategy, investors have the potential to achieve high returns. It is important to form a relationship with a real estate agent who knows your city and has access to the best opportunities. Many of these properties may be undergoing upgrades and repairs, and can be purchased off-market.