Why Buying Underperforming Properties Can Be Safer and Smarter Than You Think
At Ocean Ridge Capital, we focus on buying underperforming workforce housing—properties that need some work, like new management, renovations, or turnarounds.
This strategic focus lets us buy at a great price and turn these properties into safe, valuable assets with a strong upside for investors. If you’re used to hearing that “luxury” or “turnkey” properties are the safest bets, here’s why we think the opposite may be true—and why underperforming properties can be one of the smartest, most resilient investments you can make.
1. Buying at a Low Price Reduces Risk
When we buy an underperforming property, we’re buying it at a price that’s often far below its true potential value. We call this getting a great “asset basis,” meaning we’re buying the property for much less than it would cost to replace it. This lower starting price offers a safety cushion: even if the market shifts, these properties are less likely to lose value because we bought them at such a favorable price.
With luxury or turnkey properties, you’re buying at the top end of the market, which means you’re more exposed to market changes—if values drop, those properties are more likely to take a hit. For us, buying low means building in safety right from the start.
2. Improving the Property Adds Lasting Value
When we buy a property that needs some work, we’re not just hoping the market goes up; we’re actively improving it. By fixing up common areas, updating units, and improving management, we add real, lasting value that attracts more residents. This work often increases the property’s income and makes it more stable long-term. In workforce housing, improvements don’t have to be fancy—simple upgrades like new appliances, better security, and clean landscaping can make a huge difference in both tenant satisfaction and rental income.
Luxury and turnkey properties, on the other hand, are already fully finished, with little room for value improvements. This means there’s less opportunity to increase rents or grow value, making these investments fully reliant on market appreciation alone, which can be unpredictable.
3. Workforce Housing Is Always in Demand
Workforce housing serves renters in essential jobs—healthcare workers, teachers, and service workers. These are everyday people who need affordable, quality housing, and this demand remains steady even during economic downturns. In fact, more people may seek affordable options during tough economic times, making workforce housing a safer choice for long-term stability.
Luxury apartments are more vulnerable to changes in the economy, as people may scale back on housing costs when times are tough. Workforce housing properties, once stabilized, are typically more resilient and continue generating steady income.
4. Aligned Incentives Mean Our Success Is Your Success
In each of our deals, we structure compensation so that our interests are aligned with yours. Our team only benefits after we’ve hit specific returns for investors, which means we’re fully incentivized to deliver a strong, stable outcome. The better the property performs, the more we succeed—meaning we’re all on the same page, working toward the same goal.
The Difference with Ocean Ridge Capital
At Ocean Ridge Capital, we believe in taking an active approach to create value. By transforming underperforming properties, we’re able to buy at a great price, add meaningful improvements, and provide housing that’s in high demand. This approach keeps us focused on protecting your capital and generating lasting returns. Buying distressed workforce housing properties isn’t about taking a gamble—it’s about making smart, data-driven choices that position your investment for growth, no matter what’s happening in the broader market.