Disclaimer: The information provided in this blog is for informational purposes only and does not constitute financial or investment advice. addy is a platform for property issuers to list investment opportunities, not the issuer or seller of these securities. Investors are responsible for assessing the risks and benefits of each property offering.

When exploring real estate crowdfunding opportunities on addy, you’ll encounter properties categorized into four distinct types: Core, Core Plus, Value-Add, and Opportunistic. These categories are standard real estate investment strategies that provide insight into the characteristics and potential of each property offering. Understanding these classifications can help you align opportunities with your personal investment goals.

The categorization of properties is based on two primary factors:

1. Physical Characteristics: This includes the property’s condition, the terms of its current leases, the creditworthiness of its tenants, and its geographic location.
2. Capitalization and Debt Levels: The amount of debt leveraged for a project can significantly influence its risk profile and potential return.

Each category offers unique attributes and considerations, and it’s up to you, the investor, to evaluate whether a property fits your personal strategy. Here’s a deeper look at each type:

Core Real Estate Investments

A Core investment is defined by its low-maintenance nature and stability. These properties are typically leased to tenants under long-term agreements, which helps ensure consistent occupancy and operational predictability. This type of investing is as close as one can get to passive investing when buying properties directly. Core investments are often acquired with the intention of being held over an extended period, making them an enduring component of a diversified real estate portfolio.

 

“Core is the most conservative strategy, and might only include properties offering lower-risk and lower potential returns because they exist in well-populated or well-traveled locations.”

–Source: Investopedia

 

Example: Starbucks at 45604 Airport Road, Chilliwack, BC, listed on addy.

Core Plus Real Estate Investments

A Core Plus investment focuses on enhancing cash flows by making targeted property improvements, optimizing management practices, or upgrading the tenant base. These properties share many characteristics with Core investments, such as being high-quality and well-occupied, but they offer additional opportunities for value enhancement. Through modest updates or operational refinements, Core Plus properties aim to achieve improved financial performance while maintaining strong occupancy and overall quality.

 

“Core-plus requires a bit more risk, but can offer a higher return than the core strategy. These properties require modest levels of value-added activity or enhancement to the location.”

–Source: Investopedia

 

Example: The Lex in downtown Vancouver listed on addy.

Value-Add Real Estate Investments

A Value-Add investment strategy typically has minimal or no cash flow at the time of acquisition. However, it holds the potential to significantly increase cash flow after specific improvements are made. These enhancements may include physical property upgrades, improved management practices, the introduction of additional services, or more effective marketing strategies.

 

“Value added is a medium-to-high-return, moderate-risk strategy that centers more on property development and market timing. In this strategy, portfolio managers purchase properties, engage in some level of redevelopment, and sell when the market is performing.”

–Source: Investopedia

 

Example: The Park at Willowglen, in Calgary listed on addy.

Opportunistic Real Estate Investments 

An Opportunistic investment typically begins with minimal or no cash flow but provides significant potential for financial returns once improvements are made. This approach can involve activities like developing new properties, purchasing and repurposing vacant buildings, undertaking land development, or transforming a property for a new use.

 

“Opportunistic provides the highest level of return but assumes the most risk. With this strategy, managers purchase properties that include undeveloped land or in markets that are underperforming or lightly trafficked.”

–Source: Investopedia

 

Example: Maple View Heights purpose-built rental in Mission, BC listed on addy.

Investing on addy

addy makes it possible for issuers to list different types of properties on the addy app that fit into a variety of investment type categories. As an investor, you are responsible for reviewing each opportunity to assess whether it aligns with your risk tolerance and investment strategy and for seeking professional investment advice as needed.

You can sign up today to learn more about current and forthcoming investment opportunities and start your crowdfunding real estate journey today.

Real Estate for Everyone: