Repositioning a multifamily property

[Veronica Giggers]

Hello BP family. We are considering investing in a MF, it is 12 units with over 90% of the property empty, and needs renovations to all the units. I know there are variables to ever situation. But, approximately how long does it take to turn a MF property over, and reposition it for refinancing? I have done some calculations on rehab cost, but not sure how long it will take to start getting cash flow.

[Charles Carillo]

@Veronica Giggers

This sounds like a very heavy lift (major renovation); especially since all the units need work, and it is pretty much a vacant property. 

The time to renovate and rent the units depends on the team you have. I have done renovations like this in 90 days, and then it took another 30-45 days to fully rent the property. It also depends on your financial situation. If you have a good team, and you have all of the renovation funds in cash (no delays); you might be able to complete it within 90 days, and start receiving cashflow within 120-150 days. Seasoning the property for the bank will now take another 6-12 months (depending on the bank) from the time of full occupancy (you want to highest valuation).

I would add another month to any estimate and add another 20% to your renovation estimate (maybe more if this is your first major renovation). If you are getting hard money or a bridge loan to purchase this; I would make sure you get at least a 2-3 year term (with no prepayment penalty).

This is going to be a major project, that will require a lot of time on your part for overseeing contractors and the progress of the renovation.