HOW TO BRRRR MULTI-FAMILY WHILE REDUICNG TENANT BACKLASH

[Semilore Lawal]

Hi All,

My understanding is that the value of multifamily depends on the NOI of the property. This means to BRRRR Multi-family, you have to renovate the building and raise the rent of the units to market rate to get your money back after refinance. What is the best strategy for renovating apartments and raising the rents for pre-existing tenants in multifamily properties.

Regards,

Semi.

[Greg Scott]

In Single Family you are usually (or should) fix the entire place up before renting.  Many people carry-over this thought process to multifamily.  With rare exceptions, taking occupancy to zero and then 100% rehabbing makes no sense.  On the other hand, renovating units while occupied can be done, but comes with significant challenges.  

In multifamily we try to do most exterior and common-area projects up-front.  Our preference is to renovate units on the the turns.  If a resident moves out, for whatever reason, then fix up the unit.  The old resident won't care that you've bumped the rent a lot and the new resident is only renting with you because they see value in your updated apartment.