How do you handle other tenants when upgrading vacant units?

Question

Hi guys!

So on one of my multi-families, I'm starting to upgrade the apartments on turnovers.  I'm seeing that as soon as you do something to one apartment, everyone thinks you're supposed to do it on theirs.  What do you do?

Katrina

Samantha Klein · Answer

Is there a reason your updating the units if they won't command a sizable increase in rent? I would think it would not be worth it.

Penny Clark · Answer

@Katrina P., You might tell them that the new upgrades go with a sizable  increase in rent. See what they have to say then!

Account Closed · Answer

Why would you only ever raise rents by only $15?  Really, that's crazy.  No matter what or where your market is.

And I agree with the others.  Your answer is, "Well, the rents are higher for upgraded units.  Did you want us to upgrade yours and pay the higher rent?  It's up to you.  :-)"

Account Closed · Answer

This is something I strongly disagree with - not allowing tenants to transfer within the property.  I can understand it, if you just want to get rid of the tenant.  But, if you have a great tenant, who wants a bigger apartment, or an apartment with a better view, or one on the quieter side of the building - and you tell that tenant that they can't transfer within the property - they will move out.

The owner I worked for thought like you, and I convinced him it was crazy thinking.  You can't make tenants stay.  If you don't give tenants what they want or need, they will move out.  Sometimes you're glad of that.  But, the owner I worked for, had some crazy idea that if we just told tenants they can't transfer, that they'd tuck tail and say never mind - instead of "adios."

If you let a great tenant leave because you have a nazi policy that no tenants can transfer to other units - you will lose them, and then have to start from scratch with tenants who are an unknown.

And if you have an empty unit and you say no to a current tenant who wants it - and they decide they'd rather move if you say no - now you have two units to find new, unknown tenants for.

I will never understand the  mentality of losing great tenants because you won't let them transfer in-house.  It's really nuts.  Talk about shooting yourself in the foot.  I guess you need to feel like you're in control?  How does that work out for you?

I've looked at renting in some subsidized senior apartment buildings in a city I'd like to move to.  They have the no-transfer policy.  So, what that means is that I will not move there, until/if I can get the perfect apartment I want.  And what it means for them, is they will get tenants who don't care what apartment they can get - who will simply move when they can get one they prefer somewhere else.

This line of thinking is really crazy, and hurts the bottom line and your tenant pool.

Account Closed · Answer

Not very complicated. Just let them know they are welcome to pay for any upgrades whenever they want, and free upgrades were never offered as part of what they rented.

Christos Philippou · Answer

I think Sue K. kinda beat a dead horse throughout the post, howeverrrrr, I think she nailed it. I am still just starting out and brand new, but I have a 4-plex. One tenant moved out because she found a better part of town to live in, which we were happy about. As she was moving out, another tenant took notice and asked if he could move upstairs to her unit, as it was a little bigger.

We said sure, that's not a problem, but your rent will be a little higher to keep on par with the previous tenant. He decided he was fine and comfortable where he was at, but I presume he appreciated the gesture of us allowing it.

He just renewed his lease for another year.

Katrina P. · Answer

Thanks everyone!! I appreciate all the input!

Peter B. · Answer

I have this happen a lot. The upgrades always come with a rent increase and new contract though. If they do not want the increase and new contract they can purchase the upgrades they want and I will install or have install at there cost. Most of the time they are fine with what they have then.  I generally would not allow a transfer.. Although I just did one as the one unit was over due for rehab. Just my 2 cents...

Peter

Mike Nelson · Answer

I recently upgraded a 3-bedroom unit in Wicker Park Chicago after a tenant moved out who lived there five years.  I did extensive plastering of cracks, etc, repainting, sanding wood floors, new bedroom laminate floors, and new bathroom.  I raised the rent from $900 to $1450.   I spent $6000.   Other tenants in the building were aware of the work, so I offered a group an opportunity to change units, which they declined.   It did create a couple of requests for some minor work.

How do you handle other tenants when upgrading vacant units?

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