Make Ready or Rehab for Apartments

[Dawn Campbell]

Good afternoon,

Started to help some friends out in their PM/Owners company in their effort to get a few newly acquired distressed properties into shape.  In the last 2.5 months, we have been working tirelessly to make these reach our very high standards.  We have now hit a road block and need help with some questions answered since we don't know this industry at all.

1- What is the difference between a Make Ready and a Rehab?

2- What is the difference between an Easy, Medium and Hard Turn?

3- If there is a determinable factor for the difference between the three above descriptions, how do most Make Ready companies charge for them? And who determines the above?

4- Who maintains control of items purchased for the above work, the Management company/Landlord or the Make Ready/Rehab contractor? Who pays?

5- Is most work done for either the MR or Rehab, based on Labor Only pricing?

6- If anyone has a standard Pricing sheet for all Make Ready and Rehab work, would you be willing to share it with me?

Thank you for your time.

[Kathy Henley]

HI @Dawn Campbell What is the road block? My contractors give me bids for time and materials. Everything is on their invoice.  Sometimes I volunteer to shop around for materials (flooring and appliances), as they don't have the time. All interiors have the same paint color scheme. 

I make my apartments ready for the next tenant, or make ready. This term is generally for the work of cleaning and painting, sometimes sanding out the floors and buying appliances. We also change out all outlets and face plates, the first time we touch a building.  Yes, some need more work than others so prices vary. Any time I reach in my pocket for repairs and rehabbing, I want to know how I am going to get my money back. It is the rental market that sets the rents. I aim for top of the market, but my place near the city park gets higher rents than the one near the industrial strip. Therefore, I choose what will give me the biggest bang for the littlest out of pocket spending. I would not take the time ($) to remove popcorn on the ceiling, if the market rents would not allow me to pass it through to the tenant.  Follow the local expectations of the tenants that you are attracting, spreading the improvements as the budget allows.  I do my own painting and cleaning. Pay people for the rest.

There is a great book by J. Scott, a Bigger Pockets member, who breaks down a rehab and his method of capturing the expense.

Remember: not all rehabbing needs to be done all at once. Window replacement might be done in a later year, after the asset has earned a few dollars. New water supply lines are nice to increase the water pressure for the tenant, but the budget may not allow right away.