Indoor or Outdoor Renovations which should come first?

Question

I own an 18 unit Multi-Family building. The property is in decent shape but with modifications I can increase rents for immediate ROI. I need to execute the work slowly and in phases therefore I need to determine where to start applying the budget in order to get the best return on the investment. Do I start Inside as units get turned over or outdoor? Has anyone come across this decision and can shed light on the matter? I haven't found a direct post to this question but I'm sure it's in a discussion somewhere. Thanks in advance for your guidance.

Marcos Espinal · Answer

Thanks Michael, appreciate your comment. Good luck on your endeavors!

Marcos Espinal · Answer

@Evan Polaski

Thanks evan, that’s a good tip. Women do look at things differently than men especially the aesthetics of a space. We tend to be more meat and potatoes, I have a design bg and can hold my own but I always consult for other’s input and put to action what directly applies.

Erik Hatch · Answer

Outdoor. It’s what attracts people to your property. General upkeep and cleanliness isn’t so very costly. Fresh paint and rocks! Rocks are maintenance free.

Evan Polaski · Answer

@Marcos Espinal I am just another voice in the choir.  Exterior cannot be turning people away, as @Charles Seaman mentioned.  But you will typically see a better ROI on interior upgrades over exterior, assuming your property is presentable.

One additional note, as you are starting to renovate, if you don't already, have a designer take a look at your planned finishes.  For couples, females are the primary housing decision, so getting a female's sense can be priceless.  There is a reason Joanna Gaines from Fixer Upper is so popular.

Charles Seaman · Answer

@Marcos Espinal  The answer to your question can be determined by the condition that the exterior is currently in.  Keep in mind that people will see the outside before they ever come inside, so you want it to at least be attractive enough to make people want to stop and go inside.

With that being said, if the exterior is in decent shape and you're not having a problem attracting people to the property, then start with the unit interiors because the work that you do on the unit interiors will directly correlate to renting the units for more money.  The exterior and common area work won't typically get you more money for the units.

The major caveat is just making sure that the current condition of the exterior isn't turning people away.  If it is, then start with that because you want to make sure that people have their interest piqued enough to stop and visit the property.

Michael Orlando · Answer

The exterior looks to be in pretty good shape from the pic! A little outdated, but I think if you have some nice interior updates and professional pics taken, people will probably see those first assuming you're advertising online. If the outside was is disarray, I'd say freshen it up a bit, but in this case I would personally start inside to get your NOI up!

Marcos Espinal · Answer

Thank you Rick, appreciate your advice. As a young investor, this is my first MF acquisition and I'm very conscious of maintaining reserves. Right now my strategy of making gradual but consistent upgrades is specifically with reserves in mind. Hence the reason for this post, so that I apply the funds wisely and replenish reserves.

Marcos Espinal · Answer

@Todd Dexheimer

Thank you Todd. I’m looking for best and quickest ROI, based on my property exterior’s look and feel (I posted a picture on an earlier post ) I am leaning towards interior updates. Most comments as well as yours are leaning in that direction as well. Appreciate everyone’s time.

Todd Dexheimer · Answer

Outdoor is typically the answer, but if that is in decent shape and doesn't have a negative stigma, then just tidy it up and focus on the inside. Outside is most important when you have an eye sore or need to change the image of the property. Inside will be your big money maker.

Indoor or Outdoor Renovations which should come first?

Most Popular Reply