A comparison between investment goals of cash on cash vs value add.
Every investment is somewhere on the range between Cash Flow and Value Add.
Cash Flow – a cash flow investment is usually a stabilized asset that distributes its operating cash flows during the investment’s life span, it has lower risk as you are getting dividends from day one but the reward is usually lower as the asset isn’t expected to improve significantly.
Value Add – a value add investment focuses on the potential profit at the end of the investment. It has more risk involved as you are depending on the value add program to succeed but it usually contains more upside potential.
Most offerings in the SecondRE marketplace are a combination of the two, whether it’s a value add investment that has realized some of its potential already or a cash flowing property with some value add work involved, giving you the best of both worlds!