Multifamily Value Add suggestions

Multi-Family and Apartment Investing
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Multifamily Value Add suggestions

Yonah WeissPro Member
Cost Segregation Expert and Investor · Lakewood, NJ · Member since 2017 · 1k+ posts · 1k+ votes

I’ve recently read @Joe Fairless' awesome book The Best Ever Apartment Syndication Book, with the intention of getting more active in multifamily apartment investing. It is literally a thorough step by step process of doing this. Value Bombs on every page (of the 400+ pages). I’d like to post some discussion points for those in this space. Value-Add is a very popular strategy, which Joe takes.

Making money with an apartment building is all about creating value. Simply, the property can generate a lot more cash flow and the market value can be increased by doing any number of things.

Here's an incomplete list of value-add enhancers. What would you add?

Assigned/Carport parking 

Pet rent 

Storage units 

View/location premiums 

Automated package storage/Amazon lockers 

Wifi doorbells 

Security cameras 

Add washer and dryers 

Stainless steel appliances 

Update light fixtures 

Upgrade bathroom (cabinet, sink, shower) 

Upgrade kitchen (cabinets, sink, counter-tops) 

Build a fence around ground floor patio 

Install vending machines 

RUBS program (Ratio Utility Billing System) 

Charge for garbage pick-up 

Add a daycare 

Gym

Cost Segregation (had to add that 😁)

What would you add?

@Ellie Perlman @Brian Burke @Jeff Greenberg @Ben Leybovich @Sam Grooms @John Casmon @Todd Dexheimer @John Fortes

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Theo Hicks
Rental Property Investor · Tampa, FL · Member since 2015 · 1k+ posts · 969 votes
7y

Offer furnished units

Location/view premiums

Clubhouse rental

Appliance rentals

bike rack rental

Dog washing station

Install and lease a billboard

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  • Jason Turgeon
    Realtor · Boston, MA · Member since 2019 · 244 posts · 275 votes
    6y

    Closing on a Class C 22 unit with average rents of about $700 in SE TX shortly and am looking for ideas for value add. Units are individually metered for gas/electric/cable. Building interiors are in good shape, I'm keeping the existing PM company on and they seem very good. Some minor cosmetics to fix up on the exteriors (painting handrails, resurface the parking area, fixing some fascia boards) but it's generally pretty turnkey, and was priced accordingly. My real upside is going to be in pushing rents up a bit and controlling expenses.

    Hoping to be able to get rents to $750-$775, get the building qualified for housing vouchers/section 8 (average rents for Section 8 are in my target rent zone), and most importantly minimize turnover and vacancies. Lots of good stuff in this thread but many of the ideas either require lots of space (dog runs, etc.), lots of capital (installing carports), or lots of paid staff time (concierges, package services).

    What have you all found works best for value add on these smaller, older properties? I'm thinking of putting in stainless steel appliance packages as units turn over wherever the existing appliances are old enough to justify it (5 years plus); resurfacing  and restriping the parking area and assigning spots to each unit; maybe doing some minor landscaping upgrades; freshening up the laundry room; maybe adding a small "tot lot" play area for kids under 5. I could also investigate some sort of secure package locker system.

    Any other more basic strategies you all have found work on this type of property?

    1Reply
  • Stace Caseria
    Investor · Boston, MA · Member since 2019 · 61 posts · 36 votes
    6y

    @Jason Turgeon, you ask about basic strategies -- I have one. With 22 units, it's a manageable enough number that you could ask people what matters to them! Of course, you're not going to put in any amenity that doesn't fit with your business plan or the property, but you'll be able to gauge what add-ons will garner the most appreciation. For instance, when I recently closed on a small building here in Massachusetts, I took the first few weeks to spend some time there -- popping in on weekends, maybe a few times in the evenings during the week. Even though I have management in place, I wanted to see who was living here and I wanted them to know they mattered to me. What I found out was one tenant really liked lilies. So this spring we're plant a ton of them. An elderly tenant had trouble coming down 2 flights of stairs to let in her visiting nurse -- an electronic keypad entry lock fixed that. Another guy had been asking the previous landlord for a screen door for his back entry for the 17 years he lived there! These are simple fixes that work for smaller buildings, and they show people you appreciate them, and are listening. Lastly, I sent each tenant a small gift card to the local supermarket right before Thanksgiving. So if you're going to start increasing rents, give people reasons to stay (like respect, appreciation, dignity). 


    Let me know how the building turns out once you close on it! And best of luck!

    4Reply
  • Jason Turgeon
    Realtor · Boston, MA · Member since 2019 · 244 posts · 275 votes
    6y

    @Stace Caseria If I could have found a building anywhere within driving distance of Boston that made good financial sense, I would happily get to know them and I would be at the property every so often to make sure it was being kept up. I try to take care of my Boston tenants the way you describe. But unfortunately this property is in Texas and I am unlikely to see it more than a couple of times in the years I will own it. 

    I might send out an annual tenant satisfaction survey and offer a $25 gift card to anyone who completes one. It probably won't help with the really personal stuff like lilies, but it might let me find out about the electronic keypads and the screen doors.

    Since this is the first time I'll be owning a professionally managed out-of-state property, a big part of this is learning what I can reasonably expect from the property management firm without becoming the client they want to fire. Things like planting lilies may be challenging, and even things like keypad entries may be a negotiation since it will change how they handle keys and they have to have a system that works uniformly for the dozens of properties they manage. But I can certainly make sure that requests for things like screen doors are approved.

    Thanks!

    1Reply
  • Calvin OzanickBusiness Member
    Property Manager · Janesville, WI · Member since 2017 · 707 posts · 297 votes
    6y

    I would say Bluetooth locks or keyless entry to either the building or unit is a nice add on. 

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  • Michael Ealy
    Developer · Cincinnati, OH · Member since 2018 · 1k+ posts · 3k+ votes
    6y
    Originally posted by @Stace Caseria:

    @Jason Turgeon, you ask about basic strategies -- I have one. With 22 units, it's a manageable enough number that you could ask people what matters to them! Of course, you're not going to put in any amenity that doesn't fit with your business plan or the property, but you'll be able to gauge what add-ons will garner the most appreciation. For instance, when I recently closed on a small building here in Massachusetts, I took the first few weeks to spend some time there -- popping in on weekends, maybe a few times in the evenings during the week. Even though I have management in place, I wanted to see who was living here and I wanted them to know they mattered to me. What I found out was one tenant really liked lilies. So this spring we're plant a ton of them. An elderly tenant had trouble coming down 2 flights of stairs to let in her visiting nurse -- an electronic keypad entry lock fixed that. Another guy had been asking the previous landlord for a screen door for his back entry for the 17 years he lived there! These are simple fixes that work for smaller buildings, and they show people you appreciate them, and are listening. Lastly, I sent each tenant a small gift card to the local supermarket right before Thanksgiving. So if you're going to start increasing rents, give people reasons to stay (like respect, appreciation, dignity). 


    Let me know how the building turns out once you close on it! And best of luck!

     Stace,

    I love it - providing respect, appreciation and dignity are the same things I have used when dealing with tenants - even tenants in the properties in D/F areas. 

    I own 1,000 apartment units and I always renovate them better than where they're located (example: buildings in C areas - they get "B" finishes and they are so amazed they willingly pay the higher rent). But doing that shows that you are there to provide housing they will be proud to live in.

    2Reply
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