Are value add operators "real estate developers" or investors?
Had a debate with a friend of mine. Would you consider value add operators to be real estate developers or investors or something else?
[{"id": "ipzmefo", "text": "Depending on what they are adding investors or something else. \n\nDeveloper has more of a construction (which I admit is value adding) connotation.", "replies": [], "depth": 1}, {"id": "iq07ql0", "text": "Not sure why you are getting downvoted. But if you are renovating units, or doing something more intense like adaptive reuse, it really is a form of real estate development at that point. \n\nIn many ways (aside from the nightmare process of entitlements for raw land), it can be easier to do fresh, ground up development from raw dirt, versus a rehab or a reuse. You are starting with all new materials and don't have to worry about working around existing structures and issues. \n\nEither way, you are not just putting some debt and equity together, you are applying construction and architectural skills in order to add the said value. \n\nI think a lot of people do some pretty basic shit and try to call that value add (new doors, new paint, smart appliances, and poof). That would be closer to your \"investor\".", "replies": [], "depth": 1}, {"id": "iq0zhdh", "text": "They're not really corresponding terms in the sense they belong in different categories. \n\n'Value-add' is a conventional strategy alongside Core, Core-Plus, Opportunistic, and *sometimes* development is included (but traditionally development is a function of a strategy - usually opportunistic or value-add).\n\n'Investor' simply denotes an individual or group that extends equity or some forms of debt into a venture. So everyone with a dollar in a project is an investor so it quickly becomes a less useful definition.\n\n'Real estate developer' is more of a definition for a type of firm or individual which can be used to seperate some companies from others like REPE firms, institutional landlords, REITs etc... The term usually signals that the firm or individual is involved in site acquisition, design, construction and disposition of assets but can involve value add activities as well. \n\nSo to answer your question - all value add operators are investors (as are developers), but not all value-add operators are developers. For a value-add operator to be a developer they'd have to principally be involved in ground up construction or substantial capital improvement projects. Flipping units with new appliances, countertops and flooring and re-leasing does not make one a developer.", "replies": [], "depth": 1}, {"id": "iq1850j", "text": "There isn't a real Oxford dictionary definition of either activity.\n\n\nBut broadly speaking, no.\n\nIf some house flipper who paints walls and installs shitty Ikea kitchens wants to call themselves a developer, who cares?", "replies": [], "depth": 1}, {"id": "iq19165", "text": "I would lean more towards investor. Developers to me are more of building from the ground up. But there\u2019s certainly times where they are interchangeable. Some value adds can be adding buildings/units, others are just raising rents.", "replies": [], "depth": 1}, {"id": "iq1bg71", "text": "Some funds allow for development up to a cap", "replies": [], "depth": 1}, {"id": "iq6uwx3", "text": "Developers develop land and value-add adds value to a building. Definitely not a developer from a developers standpoint.", "replies": [], "depth": 1}]