Rehabbing your units while tenant occupied..
What has worked best for you;
-moving tenants out
-waiting until they leave to rehab
-do it while they are occupied?
Knowing this is only a 12 unit apartment with all places occupied, I'm seeing which strategy is best to do with your tenants while trying to add minor updating. Flooring, Painting, Appliances etc..
Unless you have deadlines in regards to when you have to spend your rehab money just wait until they move out. You can't increase the rents while they're still on lease anyway.
You can't really do it while they are occupied. Given the other two options, it really depends on your business plan and goals for the property. If you want to flip this quickly, you could try and buy people out of their lease or pay them to move out early. But in general I would agree with Michael and let their leases lapse and then update the units on a turn--that what we do anyway.
Agreed. Rehab them as the turn over. We have a 14 unit building and have been doing this for 4 years. When a unit turns over that hasn't been rehabbed yet, we gut it and update it, raise the rent and lease it back out. In 4 years we've rehabbed 12 of the 14 units. The last two units are occupied by long term tenants and I'm happy to let them stay put and keep paying rent.
@Wade Sikkink With the last two you should consider the market rent of the building as that of the 12 renovated units. Rents should all now be about equal. I would raise the remaining two up to the level of the renovated units and see what happens. Whether they stay at the higher market rents or go it's a win/win for you.
@Cody Dover Having been in this situation many times I would highly recommend renovating the units as they turnover. Renovating to the extent you described with tenants living in the units is a complete nightmare in 95% of the cases.
@Thomas S. Agreed. We did raise the rents on those remaining 2 units this year, just not quite as much as on the units we've renovated. If I can keep bumping them up, but keep them a little below the renovated ones without having to spend the money on a renovation, I see that as a win.
@Wade Sikkink , if you determined that you can command higher rents without renovation, then why bother beginning the renovation at all? I would only consider renovation if the rental increase can cover the cost of renovation in a year. Otherwise it's wasted money. Unless your property neighborhood will command an entirely different type of renter, For example, your area changing from a D to an A area, I don't see it as a value add.
I would begin to raise rents, and as the tenants vacate, begin to turn the units one at a time. I would not renovate while it is occupied. Are you expecting to raise rents once the rehab is complete?
Some tenants will leave when they get a rent increase, so this is your chance to rehab, and you will not have multiple vacant units to deal with