The Multifamily Repositioning Apartment Buildings Fallacy

One of the biggest fallacies that I hear many new investors talk about is how much money they are going to make by buying a C-class property in a B-class area and then reposition the property and cash out. Or it could be a B-class in an A-area. Regardless, they never understand what repositioning really means because the most important part of repositioning is never explained properly to them.

Just like with fixing and flipping single family homes, any problem can be fixed with money. You can take a C-class property and drop $6,000 per unit in rehab expenses and make it absolutely gorgeous with granite countertops and hardwood floors but that does not make it a B-class property. Remember what brings value to a multi-value business –  the contracts.

The only way to get more valuable contracts is to get higher-paying customers/residents. The fact that a unit has been completely rehabbed and is absolutely beautiful does not mean that a new tenant base is set to move in.

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