Hi everyone, I just bought a 6 unit multifamily building in Somerville Massachusetts area (close to Harvard University). I am planning to redo all the bathrooms and kitchens for all units. This is an expensive area and the carrying cost is high. I really need as much rental income as possible to offset those costs. What are the best ways to minimize rent loss while accomplish my goal of updating all units by the end of the year? Thanks in advance for your help! Mindy
@Mindy Perry Is it rented now? Fully? Inherited tenants at a lower or market price? Will this be student rentals? Is there rent control?
There are a lot of questions that need to be answered, but just to offer my .02, You are looking to renovate the 2 most expensive rooms in an apartment, the bathroom and kitchen. Assuming this is an older building- why not renovate the entire apartment on an apartment by apartment basis? You can update the wiring, lighting, flooring and get top dollar for it. You will be able to ride on the other 5 units rents and when you are done with the one you can move on to the next, and ride an even larger cushion of rent.
We did this on a 4 unit. We had the architect come in and draw up the plans for each unit because we wanted to make bathrooms bigger, shift kitchens, etc. Then we just had him split them into 4 separate plans and we dropped them at the building department on a unit by unit basis- when we were finishing up one, we dropped another for approval and went down the line.
Thanks so much Patrick! That's really helpful. They are all rented now for below market rate due to the condition of the building. I like your idea of renovating one at a time and will definitely give it a try. Thanks again,
Wait till a turn over in a unit. Its way less disruption on the tenants. This allows you to save up some capital.
Unit by unit at turnover ......
If its fully occupied and pulling rent.....and doesn't have a lot of delayed maintenance that puts habitability at risk, then there is no point in vacating people to renovate the units
Unless you have big pockets and can handle reno costs and holding costs with no rent coming in
There is no exact science, it's like pulling off a band-aid. If you do all the repairs at once, city hall might require more costly repairs than you expected. I've sold off market MFR property in Somerville and the rents on a renovated 2-3 BR would should be close to $2,500-$3K. Let me know if I can help. Thanks, Corey
What kind of shape are systems, plumbing, electric, windows? Your post mentions only kitchens and baths. There is a ton of older housing stock in Somerville and last thing you want is to redo upgrades and renovations. If systems in rough shape then consider sitting on repairs until can do all at once, or perhaps finance and refi when finished.
If decision ultimately depends solely on minimizing rent loss then I agree with others, rehab on turnover.
Kitchen, bath and spruce up should be a 1 month job if you’ve got all your ducks in a row. Try to time it, line up with Cambridge Somerville cycles (watch out for January, February)
I went through this same decision on a union square property. Ended up opting to do everything at once and hopefully have less headache over next 30 years.
I have a multi-family in Cambridge. A couple of tips:
- Get mass saves to come out to do an assessment. If you are thinking about energy saving upgrades like new windows or upgrades to heating or cooling you can save a lot of money by working with their programs.
- Think about the wiring. I did a new bathroom and facelift to the kitchen. I ended up having to rewire the apartment and add connected fire alarms. Although it was painful and expensive, knowing we got rid of the old wiring helps me sleep at night.
- You may want to think about raising the rents anyway, before doing kitchens and bathrooms. If the previous owner owned the property for a considerable amount of time they probably didn't keep up with market rates.
- As other said, do it one-by-one. However, do not miss the June - Sept rental window. If you do, do a short-term lease that ends sometime in the sweet spot of Boston area rentals.
- Spend some time thinking about how much to spend. In this area the ROI isn't always great for major improvements on rentals unless they are truly needed.
Good luck and feel free to reach out with any questions.
Thanks so muc Dan! I really appreciate it. Could i talk to you about some specific tenant lease renewal questions? My cell is 6179219188. thanks so much!
Absolutely, I'll reach out to you.
great! Thanks so much!
Thanks Patrick, Jim, Corey, Tony and Dan so much for replying to my post. I have decided to take your advice by doing the renovation one unit at a time and try to get it done by the year end. Will let you know how it goes.
Thanks so much for all your help!
That's great Mindy, keep us posted and good luck!