I was talking with a colleague recently about the differences in our two primary investment strategies; class B/C value-add and ground-up development within Opportunity Zones. These are two opposite ends of the apartment spectrum.

He made a comment that he loves the concept of building class A buildings that he’ll be proud to show his children one day. That comment stuck with me, and I’ve been thinking about it ever since. In one sense, I get it. Building sexy buildings in cool up-and-coming markets is fun. The high-end design aesthetic combined with modern amenities, great public spaces, and cool branding make working on the projects a thrill and fun to show off. On the other hand, though, these projects are a dime a dozen these days and largely appeal to young professionals who are renters by choice.

These renters spend a few years living in the city as they get established in their career before starting a family and eventually moving to the suburbs. They have dozens of buildings to choose from which largely compete on price, reputation, and being the new/cool property in town.

The class C value-add platform is completely different. It’s a value investing strategy where we seek to acquire mis-managed and outdated communities at a great basis. We cure the deferred maintenance, upgrade the unit interiors, create new clubhouses and modern amenities, bring in professional property management, and rebrand the assets. When the repositioning is complete, we seek to deliver a value product priced in line with the comps, but with superior amenities, unit interiors, and management.

The renters we appeal to are primarily renters by necessity who are cost-conscious and seek a safe home for them and their families. They can’t afford the new developments in the area and if they were to move to a cheaper community, they’d likely be dealing with slumlords and unsafe living conditions.

We provide them a great place to live at a reasonable price with an unwavering focus on the resident experience. Personally, I’m incredibly proud of the homes we provide our residents and niche we fill within the broader housing market.

These assets are not nearly as exciting as ground-up developments, but they are arguably much more important. One day, as my kids get older, I’m going to be proud to show off these great communities and share the stories of our residents.