At the peak of the last investment real-estate cycle in 2006-2007, investors borrowed hundreds of billions of dollars to finance the acquisition of investment properties from coast-to-coast. While many loans went into default during the ensuing financial crisis as building owners were unable to service the principal and interest on their obligations, the vast majority of that 10-year debt survived the crisis and is now coming due over the next 12 months. This coming wave of mortgage refinancing is just one piece of an ever-evolving real estate debt marketplace.
Operational improvements offer building owners the opportunity to improve cash flow by increasing efficiency. For value-add investors in particular, who are often purchasing undervalued Class-B and Class-C assets with the goal of making smart capital improvements to maximize returns, identifying ways to make a building run more efficiently is a critical first step. When considering how to improve the efficiency of your real estate investment properties, consider these key areas.