Following up on our August’s article about value-add strategies in real estate we wanted to explore another strategy within the world of real estate – core-plus strategy. A core-plus strategy offers investors a balanced risk / reward approach, with both steady income and potential for value appreciation.
In this article we will cover some key features of a core-plus strategy and explain what types of funding is available for investors.
In short, a core-plus strategy combines characteristics of core and value-add strategies. Similar to core strategies (which focus on well stabilized properties with certain cash flow and limited capital appreciation), core-plus strategies are based on high-quality properties in prime locations. However, the “plus” element in core-plus enhances the strategy by providing potential for significant capital appreciation, just like value-add strategy would.
Core-plus strategies combine core and value-add strategies, resulting in the following characteristics:
Combination of these two features make core-plus strategies suitable for income-oriented investors who are seeking additional return via capital appreciation. However, it is worth noting that core-plus strategies are unlikely to achieve the same capital appreciation as value-add strategies.
One of the advantages of core-plus strategies over value-add strategies is increased availability of capital due to their...