$3500 - $7500 Apartment Renovations???
Why do our renovation expenses seem to be so much more expensive than investors I hear on BP podcasts or at conferences, etc.? I hear investors repeatedly quoting renovation expenses of value-add apartment renovations between $3500-$7500/unit. I have no idea how they are doing this given the fixed expenses associated with construction and materials. Routinely investors on these platforms list appliances, counters, flooring, and updated cabinetry(facing/painting/hardware/etc.), among other things as part of their value-add renovations.
I began investing in small multi-family properties in need of significant renovations about 4yrs ago. The properties are value-add investments with complete renovations to the buildings both inside and out. My experience has been that with these properties our renovation expense has typically been $20-$25k+ per unit. This covers stainless appliances, counters(stone or laminate pending location), refinishing hardwoods or installing new laminate floorings, paint, cabinets, light fixtures, complete bath renovations, etc. So pretty much everything is new when we are finished.
Is this just a case of blurred definitions for value-add? Maybe our company is going way to far with renovations that aren't necessary to re-position the properties?
Some common renovation expenses:
Entry level stainless appliances are $1600 - $2000
To repaint all surfaces of a 800 sq ft apartment is going to cost at least $1500; probably more.
New flooring is at least $2/sq ft for product and another $3 sq ft to remove the old flooring and install. That's another $4000 per unit. (I hear numbers like $1200 for flooring thrown around by investors - what flooring is this and who is installing it for so little?)
Counters are $600-$800 for laminate or $1500 - $2500 for stone.
This doesn't count lighting fixtures, bathrooms fixtures, window treatments, etc. And the total is already at a minimum $7000 - $7500. If the bathroom needs to be redone or kitchen cabinets need updating/replacing/etc. the cost increases exponentially.
So my question is this. What renovations can be done within the $3500 - $7500 price points I always see quoted? Maybe our company is just buying properties in need of more renovation per unit than most investors will tackle? Someone please educate me on how on what we may be doing wrong. Or are they just buying properties in need of much lighter renovations? Send me your thoughts so we can improve our process and reduce our renovation expenses!
Thank you.