Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
Hi Fellow Apartment Investors,
I am currently under contract on a 36 unit apartment complex in Springfield, IL. The property is a class C property, but it is 2.1 miles from the University of Illinois Springfield. The University has a large population of exchange and graduate students, and I am very interested in trying to attract them to this property. I am looking for ways to add value to the property and potentially attract a better class of tenant. Have any of you done the following, and if so how expensive/useful was it?
-Added a fenced in dog run/dog park. The property has a 2.1 acre lot, so I could easily create a fenced area to attract pet lovers.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
@John Warren You might find yourself in a catch-22 and here's what I mean. Let's see you have those Class C tenants right now. It sounds like you don't really love them. But, well, they're there and paying rent so you can't really give them the ol' boot. I've looked at two apartment buildings with either large courtyard or adjacent lot that came with the deal "free". Of course, the seller agent talks about value add with a picnic table, park-like area, play area for kids, etc. Then after talking to a few people I figure out there USED TO BE a picnic area. What happened to it? Tenants destroyed the picnic tables (who knows how)...in 30 days in one property and less than 90 on the other. I also can't fathom what having a playground would do to your insurance. Along the same lines, I can't imagine having grills with hot coals would fill an insurance company with joy either. Now to be fair, one was in an area I'd like think was C or C- and the other was maybe D+. If you have a solid "C" area and think you can really attract better tenants, surrounding buildings are nicer, etc. then you could have some value add opportunity. But if your kitchens are linoleum instead of tile (for a random example) or there are popcorn ceilings or there is wood paneling on the wall you might be able to better spend some rehab money in the units rather than on amenities.
What I think might be more attractive (with large upfront cost) is looking at how to get super duper high speed wi-fi or wired internet access for the complex. Offering a "free internet" to college students can't be a bad thing. Just make sure it can handle a bunch of 19 years old binging on Netflix at the same time. For them it's a tangible savings but maybe if you talk to the cable company or internet provider they can cut you a deal since it's 36 units.
Syndication Expert and Investor · Indianapolis, IN · Member since 2016 · 591 posts · 808 votes
8y
I have seen some small community gardens at at a few multifamily properties that look great and give the property a really nice sense of community. It's also a way to "move them in" while showing units. "Here is a plot with your name on it, do you like fresh herbs and veggies?"
Raised beds are cheap and easy to build, it may take a little maintenance/weeding if residents let it get overgrown.
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
8y
The community garden was also one requested by some of our tenant/students. An outdoor meeting barbeque area with a sand volleyball court is not real expensive.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
8y
@Jeff Greenberg thanks so much for the input! Would you put something like this in to attract students, or would you poll current tenants to see if it is desirable? I love the sand volleyball idea!
I guess I want to make sure not to over improve or waste money on something either!
Real Estate Consultant · Camarillo, CA · Member since 2010 · 2k+ posts · 1k+ votes
8y
In my opinion you need decide if you want to attract students or non students. Although I am sure it could work, I have heard negative feedback on trying mixed use. If you do want to attract students, I would go for the graduate students and young professors that have gotten past their partying days. Loud partying at night and kids screaming and playing in the morning is not the best mix.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
@John Warren You might find yourself in a catch-22 and here's what I mean. Let's see you have those Class C tenants right now. It sounds like you don't really love them. But, well, they're there and paying rent so you can't really give them the ol' boot. I've looked at two apartment buildings with either large courtyard or adjacent lot that came with the deal "free". Of course, the seller agent talks about value add with a picnic table, park-like area, play area for kids, etc. Then after talking to a few people I figure out there USED TO BE a picnic area. What happened to it? Tenants destroyed the picnic tables (who knows how)...in 30 days in one property and less than 90 on the other. I also can't fathom what having a playground would do to your insurance. Along the same lines, I can't imagine having grills with hot coals would fill an insurance company with joy either. Now to be fair, one was in an area I'd like think was C or C- and the other was maybe D+. If you have a solid "C" area and think you can really attract better tenants, surrounding buildings are nicer, etc. then you could have some value add opportunity. But if your kitchens are linoleum instead of tile (for a random example) or there are popcorn ceilings or there is wood paneling on the wall you might be able to better spend some rehab money in the units rather than on amenities.
What I think might be more attractive (with large upfront cost) is looking at how to get super duper high speed wi-fi or wired internet access for the complex. Offering a "free internet" to college students can't be a bad thing. Just make sure it can handle a bunch of 19 years old binging on Netflix at the same time. For them it's a tangible savings but maybe if you talk to the cable company or internet provider they can cut you a deal since it's 36 units.
Rental Property Investor · Omaha, NE · Member since 2017 · 14 posts · 4 votes
8y
I would really focus on having good high speed internets though. I lived at an apartment complex that offered "free" internets, and there was not a single month that we went for days without any internets. And when it did work it was slow. By the time we moved out I noticed that the reviews were so focused on how bad the internets was, that this was a huge negative factor that led to people not wanting to live there.
Investor · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
8y
For student use - I'd say free wifi. How about a monthly pizza party outside during the nice months of the year? Might keep some people there for more than one year.
I am currently under contract on a 36 unit apartment complex in Springfield, IL. The property is a class C property, but it is 2.1 miles from the University of Illinois Springfield. The University has a large population of exchange and graduate students, and I am very interested in trying to attract them to this property. I am looking for ways to add value to the property and potentially attract a better class of tenant. Have any of you done the following, and if so how expensive/useful was it?
-Added a fenced in dog run/dog park. The property has a 2.1 acre lot, so I could easily create a fenced area to attract pet lovers.
-Added a playground.
-Added grills/picnic tables
Thanks in advance!
John
What do college students need in or near their living quarters? My memory tells me I always liked having a gym nearby, somewhere that I could leave my room and study in (Study room), somewhere to do mock presentations, a game room, etc.
Investor · Akron, OH · Member since 2016 · 2k+ posts · 4k+ votes
8y
I have 8 1-bedroom units 1 mile from the student center of the university on a main thoroughfare in a "C" neighborhood (at best; okay maybe C-; okay, anywhere off the main road is probably D). The former owner said he never put up for rent signs or advertised on craigslist because he didn't want to rent to people from the neighborhood. I have mostly single ladies in their mid-twenties some are students some are not; One older lady, and two college age couples. The things most wanted are better offstreet parking, covered parking and washer-dryers (coinop or hook ups).
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
8y
@Andrew Johnson thanks so much for the feedback! I currently own a C- apartment complex, and I definitely agree with everything you are saying! Maybe this huge area of grass is grass for a reason...
The interiors of the units are decent (1980's build), and have a lot of the amenities that most people want. These units all have central ac, dishwashers and balconies. I really like the idea of "free" internet, and will definitely be looking into that!
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
8y
@Lance Peterson thanks for the feedback on the internet! Your are right. It is probably better to not over promise and under perform, especially if it interrupts peoples netflix!
@Matthew Paul I like the shuttle bus idea! I will have to see if that is feasible. It could definitely be interesting!
@Ola Dantis I also love the gym idea. The issue at this property is that there is no existing space sitting idle. Pretty much the whole structure is currently being used as actual apartments. I have been thinking about ways to add a gym without a ton of cost, and I haven't been able to come up with anything yet.
@Filipe Pereira thanks for all the ideas. I like the idea of a study room, etc.
Study the current tenants and who you think you will attract. I would ask the tenants you have what they would like to see. Do you have room for a small fitness center or a place for students to hang out with Wifi. Possibly upgrading the units by adding nicer appliances/flooring.
Are you going to keep it a C property? You first have to answer that question, and how much additional rent you will get if you raise the asset class. Adding amenities and not increasing NOI is a sure way to go broke.
Real Estate Investor · Encinitas, CA · Member since 2016 · 3k+ posts · 3k+ votes
8y
@John Warren Well, my sample size is n=2 so don't take it as gospel :-) But in one case it was my PM that managed a complex with three buildings and a courtyard. It was a pretty big courtyard, ugly, the current owner didn't do anything with it, so I was just asking her what I could do about making it look nicer. I wasn't concerned about a direct ROI from increasing rents (not that @Gino Barbaro is wrong about making sure you get a return) but the indirect ROI from getting more applicants, having more choice, getting better quality of tenant, have less wear on the units, have tenants stay longer, etc. If you get bored, start modeling out what happens with 20 units and 12 vs. 18 month average tenure. That's when she talked to me about the picnic table destruction :-) So you end up with a chicken/egg issue. You don't want to invest in amenities until you get quality tenants. Quality tenants might not come without amenities.
And, for what it's worth, you're likely to face similar insurance challenges with a gym. What happens if Little Jane strolls in there to "play" and falls off a treadmill and gets a concussion? Someone is getting sued and it's probably you. Was the equipment maintained, was the door properly secured, did you have signs posted, blah...blah...blah. Anyway, talk to your insurance company!
Developer · Boston, MA · Member since 2014 · 88 posts · 56 votes
8y
I would recommend adding a gym as well as a small "office center" where they can sit down and do work so they don't have to go to the library or can work on group projects.
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
8y
@Gino Barbaro thanks so much for the feedback. I don't have any room for a fitness center or lounge unfortunately. The space in these buildings was used very efficiently to create apartments and individual storage units. I like the idea of testing some small in unit upgrades. Currently, the place is full of vinyl and carpet. I thought about testing a nice paint scheme and some trendier colored flooring.
I have to admit that this particular property is probably located to close to all of the other apartment buildings to really "re position". The units are nice though, so I was thinking I could do a few small things to attract students. Maybe I am better served keeping it a C class property!
Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
8y
@Michael Dang I love the bike rack idea. That doesn't sound too expensive, and shouldn't require a bunch of maintenance.
The place currently has storage units, but the current owner has been including them. They are numbered and on the same floor as the units. Do you think it is worth trying to get extra rent for them?