Renovating Condo I am Renting

5 Replies

I've been renting condo for 2 years and will be renewing my lease for a 3rd year at the end of this month. The owners put the condo on the market about 6 months ago and have been showing it regularly. It seems to be a little overpriced to me because the kitchen and bathroom are a little outdated. I figure it will help them with their future plans to sell the condo and I could pay less rent as compensation. 

I work in construction as a project manager that builds large multi-family apartment buildings. I am currently helping manage a 171 unit building so I am experienced in the field and am comfortable putting an estimate together for the work. 

The renovations I would be proposing would be replacing the kitchen cabinets and countertops and replacing the bathroom floor and wall tile. I am planning on doing the renovations myself with the help of a friend who has done several significant renovations in his own home. I just need to check with the condo association about any requirements they have for working in the building. 

Assuming I get the okay to do the work myself, I am trying to figure out what the best way to structure the deal is when I go to propose it to the owner. I would have a hard estimate together for the material but the labor would be my own time which I don't have a rate figured out for. So I would expect to get any material costs compensated via rent credit but would like some help determining how much additional credit I should ask for in compensation for the labor and increase in value of the condo. 

What's in it for the investor? In some markets, an outdated property will rent just fine. Renovations only make sense when they generate a return in higher rent or resale. Sounds like you want a nicer place to live in and that you have the skill and ability to make that happen. Why not look into buying your own "outdated/inexpensive" condo and making it your home, investment, and future great ROI. There are first mortgages that come with rehab financing to fund those upgrades.

Otherwise, show how their investment in materials would increase the appraised value of the property (get a broker to do a Broker Analysis before and after improvements) - and offer to sign a longer term lease.  Win-win or forget it.  

Think about becoming an owner/investor. Rates are low and there are many qualifying options. Take care of you first.

@Patricia Steiner Thank you for the feedback. What’s in it for the investor is that they have been trying to sell the property and haven’t had any luck. I believe that these upgrades would improve their chances of selling it. There are other units for sale in the same building with upgraded kitchen and bathroom that are for the same sale price.

I agree that using a broker to do a before/after repair value would be a good starting point to include in my discussion. My logic is that they could make these improvements to the apartment for a net zero cost since it’s just coming out of my rent and then they would improve their chances of making a sale.

My main question is how to quantify the amount of compensation I should ask the owners for.

@Wayne Brooks Understood. What I was getting at is if they waited until the unit was unoccupied to do any sort of upgrades then it would be more expensive for them. There other option would be to drop the price to something that reflects the current state of the unit. I’m fairly confident they’d be losing more money going that route than paying me to do repairs.

Do you have any ideas on how the compensation cost would be determined?

@Zachary Selter

Zachary, I appreciate what you're trying to do and what you bring to the table. If you were to approach one of my clients, they would pass. The reality is that they have a tenant paying fair market rent currently. There's no reason to disrupt what's working.  My investors and I have vetted contractors/handymen who do all of our work to minimize interruptions/loss of income/mitigate expenses.  It's part of our model.  Again, there's a good tenant paying fair market rent now.  That's the win.