How to find apartments and hotels that you can improve?

Question

The idea in apartment complex or hotel searching is that you need to find something that you can immediately improve (then probably refinance).

What should you be looking for exactly that lets you know you can improve this property right away?

Jered Sturm · Answer

@Patrick Philip You will be looking for opportunities to increase income or decrease expenses. That is the beauty of Multifamily. You can control the value by seizing the opportunity and oiling the machine to max efficiency. The opportunities on how to do this are only limited by creativity. Many people focus on the obvious stuff like raising rents increasing economic occupancy and so on. But there are many other ways. Also so often many focus on increasing income but the inverse of decreasing expenses is equal if not more powerful because it often doesn't have more cost to your residents.

Here is a blog where I wrote about a recent 42 unit we bought and did creative things to add value.

https://www.biggerpockets.com/renewsblog/bought-multi-million-dollar-apartment-complex-age-26/

Just a few ways to produce ancillary income:

- Laundry

• Coin laundry
• Detergent/laundry essentials in a vending machine in the common area laundry rooms.
• Rent individual W/D to each unit

-Parking

• Garage parking
• Covered parking
• prime spot parking
• Just plain old charge for parking

-Renovations

• Interior units upgrades
• Common area renovation
• Exterior upgrades for curb appeal

-Vending machines

• In common areas such as exercise room, pool house, laundry or leasing office

-Trash pick up service

• In high-end buildings they have a service where you can set trash outside your door and for a fee maintenance will go around each night and collect it so the resident doesn't have to carry it to the dumpster.

-Pet rent

• Depending on your building you can add income by allowing pets and charging for them.

-Storage units

• Small closet size or even garages.

-Sub metering of utilities or RUBS

-Renegotiating all operating expenses

Survey your residents and ask "What would make your living experience better here at _______" This will open the door for ideas and they use your creative to build on those suggestion and figure out how to solve a these problems your residents have.

Patrick Philip · Answer

@Chris Tracy @Joe Belman what expenses are usually too high? What are the signs of poor management?

Chris Tracy · Answer

When I'm underwriting potential apartment deals, one of the first things I look for is high expenses/ poor management.