Investor · Toronto, Ontario · Member since 2022 · 23 posts · 3 votes
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.
Rental Property Investor · SE Michigan · Member since 2014 · 4k+ posts · 6k+ votes
3y
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.
Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes
3y
Totally agree with the wise counsel of @Greg Scott.
My recommendation is to get ready. What are market rents based on possible renovations? The last thing you should do is over-improve so use this time to get the exterior in stellar condition, prepare a scope of work, determine tenant lease end dates and decide whether not to renew (and lose the cash flow) in order to renovate or whether you can do more modest upgrades while retaining those tenants.
Congrats on your acquisition. Keep the cash flowing...
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.
Thanks for the advice! How do I go about raising the rents for the old tenants without getting resistance?
Totally agree with the wise counsel of @Greg Scott.
My recommendation is to get ready. What are market rents based on possible renovations? The last thing you should do is over-improve so use this time to get the exterior in stellar condition, prepare a scope of work, determine tenant lease end dates and decide whether not to renew (and lose the cash flow) in order to renovate or whether you can do more modest upgrades while retaining those tenants.
Congrats on your acquisition. Keep the cash flowing...