Implementing RUBS and below market rents

[Saim Chaudhry]

Hi all

Doing some numbers on a deal and I have a few questions. The property I am looking at is 100% occupied, Class C 1970's construction. There is no RUBS in place, and rents are below market about $100-150. After renovation, rents can be increased an additional ~$100-150.

The plan is to renovate units & achieve the post rehab rents & have the property completely stabilized and performing at its peak within 3-5 years.

I'd like to ask the best way to implement RUBS and rent increases for a 5 year hold.
1. Should you do both at the same time? This way vacancies may increase and you can aggressively remodel and turn units, or should one be done after the other.
2. To implement RUBS - should you go straight for 75% to the tenants or increase quarter by qaurter, or year by year?
3. What is a "safe" number of units to renovate per year, is it a third, a quarter, or just go in as aggressive as possible to get the majority of them done in the first year? What is the best and most efficient way to balance?

And an off topic question on calculating vacancy during renovations for 40 units

Assuming 1/3rd of the units (13.3 units) renovated each year

15 days per renovation for each unit

40 units x 12 months = 480 unit-months per year

13.3 units/0.5 months = 6.65 unit months

6.65 unit months/480 total unit months = 0.0138

0.0138 x 100 = 1.38% vacancy?

Doesn't seem right - is my approach correct?

Thanks!