Core: Lower Risk & Lower Returns. Core is the most conservative of the four categories. Lower risk is the result of using lower leverage and selecting properties with the highest probability of consistent cash flow. The properties are often positioned in strong markets and A locations that are easily financed.
Core investments can be more closely related to risk factors associated with Blue Chip and Large Cap stocks. Risk is always present, however, there is lower probability of sustaining loss of investment with core investments. Core investments are ideal conservative income seekers who put more focus on cash flow than equity growth.
Core-Plus: Moderate Risk & Moderate Returns. These investments are similar to Core but carry slightly higher risk. They may include properties that require minor rehab or they are in B locations that are stable or in the path of progress and new development. These properties may also appeal to Core investors.
Value-Add: Medium-to-High Risk & Medium-to-High Return. Value-add properties have the opportunity for increasing value as a result of improving the property, improving the operational efficiency, or both. Property values or rents are increased as a result of adding value to the property. The increased risk comes from the expectation that the improvments will generate higher cash flow, inrcreased equity, or both.
Opportunistic-Development: Higher Risk & Higher Return. These properties require major renovations and repairs or ground-up new speculative home building. Risks vary’s depending upon the significance of the project. The potential returns are very high, but risk is highest as well.
About Ventures 5280: V5280 classifies and underwrites each investment opportunity and shares the information with equity partners and investors to assess and render educated investment decisions prior to investing.