Is there a good way to estimate cosmetic upgrade costs to refresh a property to improve it's marketability for renting out? I imagine it would be on a case-by-case basis but just looking for general guidelines to help out with projections (still looking for first deal). If it helps, this is for multi-family in Southern California and I was thinking things like repainting interior/exteriors, redoing flooring, redoing front lawn (if available), recaulking bathrooms, redoing countertops, etc.
what is the demand in your area? how long comparable properties stay on the market? Curb appeal, clean interiors without carpet stains cracked tile , shaky toilets etc It does not take a lot of money to present a clean ready to rent product .Check on your competition to guide you
Depends on how much you want to spend and how bad the unit is. Is the rent under market and you are wanting to up the rent? Its easier to do all of this when you have an empty unit.
I have a two bedroom, 900 sq ft and just got it painted (lots of prep), all new flooring, kitchen cabinets / counter, sink, some plumbing, water heater and new appliances (stove & fridge) and it cost me about $10k.
New paint, carpet, vinyl, appliances, etc. adds up. I would start by finding a good contractor and getting some estimates. Once you do a total lipstick on a pig, you will have a baseline of what it costs.
I would ask other owners of similar type properties and see who they use. You may be able to set something up long term with someone and get a discount. You can also use thumbtack.com it's an online service which provides handyman, contractors etc for all sorts of jobs. IV used it in the past and it worked out for me. Side note:the stuff you have listed to do you can probably DIY it and save money. What doesn't go in their pocket goes in yours. Good luck!
Hi @Mark Huang
There is a huge difference in costs if it's an A class vs. C class.
You will get different prices if you paint 3 apartments vs. 300 apartments.
And there is also a difference in turning units vs. just doing "make-ready" between tenants.
If you would narrow down the question we might be able to help with more specific numbers.
Mark, if you haven't already done so, I recommend you get J Scott's book "The Book on Estimating Rehab Costs". He provides system by system, task by task break down of doing Rehab Estimates. Very good book to use and reuse. You will be able to develop your own walk through checklist to build an accurate SOW and build your budget.
Until then you can use the square foot method of estimating (not as accurate). Basic full cosmetic rehab on lower end properties $20 - $25 per square foot. Upgrades $30 - $35 per square foot. Only use this method to get a ballpark figure in your initial analysis and before you can walk the property with your contractor.
Here's to smart investing.
@Mark Huang You can use estimation tools, estimates from contractors, or experience. Experience will come eventually, but I do like the book @John Leavelle mentioned as a good primer. For tools, there are of course paid ones, but also free ones like Homewyze. The arguably more important thing to consider, is to prioritize which upgrades you want to do in the first place, and for that @Steven Picker is right on, you should look at market demands and the competition.
Thanks for the info guys.
@Joseph Gozlan This would be for a B or C class property, 5-10 units. Most likely five. Could you explain the difference between turning units and make-ready?
@Kurt K. How lond did that process take you to do? (two bedrooms, 900 SF unit)
@Varinder Kumar Is it possible to get estimates from contractors if you don't have a specific property in mind? I'm trying to get an idea of how much I should budget for when I purchase my first property and have to bring it up to market. A few of the properties for sale I've come across have a difference between current rent and market rent. There could be a variety of reasons why its not at market but I assume that one of them is that the subject property has been neglected and needs a bit of a refresh to make it competitive.
@John Leavelle Thanks for the book recommendation John. I suppose I would be correct in assuming that you're estimationg of $20-25/SF is based on your location in TX i.e. that price range would be different in SoCal?
@Kuba F. Thanks. I'll check out Homewyze.
@Mark Huang I had two units that were next to each other and did the same thing to both. It took the contractors a total of about 20 days to get everything done. I lined up all of the contractors. For each unit, painting (3 days, lots of prep), flooring (2.5 days, replace all vinyl and carpeting, kitchen cabinets (1 day), water heater (.5 day). Keep in mind I had a couple of days after each contractor was done to not overlap services. This is just an estimate.
@Mark Huang they might give you quotes but as always they would want to come out and see the property first. You can also use http://www.homewyse.com/ I think it might help you out. 👍
We have done many apartment communities renovations and I have found cost will vary based on what is needed, but you can always bet on painting as a constant item. Usually floors are a close second...then fixtures and possibly appliances/kitchens if they are old.
Normally we get lots of bids on everything and try to get the best cost per unit by trying to do as large of a property we can afford or find. Cookie cutter units vs. lots of unit variation is preferred to make renovation work easy to multiply and duplicate.
If you can mix this with rents that are under market it isn't hard to bring rents up close to 30%.
Your area and comps are very important when making sure rents are under market first.
I suggest putting a spreadsheet together and start to plug and play with options calculating the cost per unit.
Our renovations have varied from 5-17k a unit. It is very easy to push renovation cost to 20k plus, But I have found you don't get much more rent for the extra improvements past 10k. Every situation is different so this is just what I have personally experienced, but have always gotten great ROI doing this.
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