How to remodel new occupied multi unit purchase

Question

Hi

I am currently searching for multi unit properties to purchase, specifically property with value add potential in the midwest. I am looking at some properties that would most likely achieve higher rents with some updating of the units. My question is how best to go about performing the work if I am a purchasing property that are already fully occupied. Is the only viable way to complete the work by doing so individually after each tenant moves out or has anyone had success with coming to an agreement with the tenants? I guess there would be other factors to work out with the tenants as well other than just performing the work such as agreeing to new rental rates and terms.

Thanks for the advice!!

Adam Paxton · Answer

Thomas S. Thanks! Surely a  lengthy process but hopefully pays off

Dillon Loomis · Answer

@Adam Paxton sure thing man. If you think of it, keep me posted on how that plays out for you. I'd love to hear what you decide and how the tenants respond. Always enjoy hearing others experiences.

Adam Paxton · Answer

@Dillon Loomis great advice. I like the approach of raising rents immediately before any work hoping they decide to move on and if not at least get higher rents than previously until they do move out. Thanks

@Jacob Anderson hi Jacob I see you're  a wholesaler in ca. I'm in LA and am also looking for flips locally. If you're operating in the area would love to see any properties you may get under contract.

Dillon Loomis · Answer

@Adam Paxton if it's a major renovation you plan to do I'd probably wait until a tenant moves out. I don't know if I'd evict someone just to raise the rents (unless they were grossly under rented) and bring an unnecessary vacancy upon myself. As always, it depends on the situation.

If the rent has not been raised in years and the current lease does not disallow it, you could explain the need to raise the rents due to inflation and other factors and wait to do the remodeling when someone moves out, and still increase the rent in the interim. This could potentially cause them to look elsewhere and move out, and if so then you have your chance for updates. If not, you get a higher rent and can hold off on the updates/tenant turnover.

If it is quick, surface level type of work - talk to the tenants and see if they have any weekend/week trips planned. Maybe you or whoever performs the work could go in (with their permission) and do some updating, with the understanding that the rates and agreement are subject to change.

Jacob Anderson · Answer

You can also look at the lease contract that is in place. When I was renting, it had said that they could raise the rent each year by so much. If is that way in yours, you could raise the rent on 1 or 2 of them to start the remodel.

Have fun!

Scott Weaner · Answer

Just wait until a unit goes vacant, then renovate.

Thomas S. · Answer

Evict tenants one unit at a time to complete the renos then re rent at higher rate.