How to turn around an apartment complex

Question

I would like to hear some specifics from investors that have taken poorly performing apt complexes and the steps they've taken to get them turned around.

Say you had bad tenants, maintenance issues, C area and you seem to be attracting D tenants.

What specific steps would you take to get the place turned around and performing?

Calvin Ozanick · Answer

Luka,

I have actually just managed the turn around on a 30 unit that perfectly fits these descriptions. The property was occupied at roughly 60% and rents were about $125 below market value. First thing we did was get in and improve the overall quality of the building. While this is a major task, focus on the common areas of the building first. If the first impression someone gets walking into a building is bad, you will not bring C or B tenants. Next, you will need to update the units. We know that cosmetic work can go a long way. If the carpet is old, replace it, if the paint is chipping or ugly, throw something neutral on it. Then it comes to placing a skilled property manager to fill the units for market rents with good people. I wish you the best of luck along the way. Feel free to PM me if you would like more specifics.

Mike Dymski · Answer

Make it an apartment community instead of an apartment complex.

• Fix exterior deferred maintenance and landscaping
• Enforce lease terms
• Respond quickly to maintenance calls
• Provide safe and clean housing
• Work with residents to exit those who are not interested in the improved management
• Rehab interiors and increase rents to market
• Market well, show units quickly, and use tight screening

Michael Ealy · Answer

Luka,

I have so many examples. Here's one: (48 unit building I turned around and sold 6 years later and made $1M profit on)https://www.biggerpockets.com/forums/311/topics/644570-how-i-made-over-1-million-on-1-deal-after-6-years-of-headaches

Here's another one: (96 units, sold for a $1.5 Million profit not including the cashflow in just 2.5 years)https://www.biggerpockets.com/forums/432/topics/765918-whats-your-most-successful-apartment-deal-everAnd here's a 30-unit townhome that is still on-going and should be complete 1st quarter of 2020 and I project a profit of $2M or a cashflow of $15K/month:https://www.biggerpockets.com/forums/432/topics/753858-brrr-actual-deal-2m-profit-or-15k-mo-cashflow-with-picturesWe have turned around other apartment buildings over the years and became our specialty. However, nowadays, we are doing "light" repositioning: put in cosmetic improvements and better finishes in apartments where the owners did not increase the rents and then increase the rents to market.

Danny Randazzo · Answer

@Luka Milicevic we re-position properties all time with value add renovation. We purchase an asset that needs work (interior and exterior) then spend money upgrading/completing repairs so we can collect higher rents from exists residents and or attract new residents

Luka Milicevic · Answer

@Michael Ealy I read all of them. Thanks for sharing

Luka Milicevic · Answer

@Calvin Ozanick Thanks for the reply! I'm going to reach out for specifics :-)

How to turn around an apartment complex

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