Tactics for Rehabing an Inhabited Multi-Family
Member since 2021 · 6 posts · 3 votes
Hey everyone,
I plan on BRRRR-ing a small multi-family. I am most likely going to end up with a semi or fully inhabited property.
What are some strategies you have used or know about when renovating an inhabited multi-family? Or do you wait until there is a vacancy?
My concern is the tenants' comfort and their right to privacy.
Thanks in advance
Hey! A fellow Austinite.
There are a few strategies here - as a former Property Manager overseeing major unit rehabs, we would play musical chairs (move tenants into rehabbed units after they were completed for a discount (I.E. 20% off 1st full month's rent). This is managed 2 ways.
1.You can inform the resident that their rent will be going up to market value of a rehabbed unit when their lease is up, regardless of whether or not their unit is rented. This will do 2 things, encourage them to move into a rehabbed unit ahead of their lease expiration (and fill your vacant rehabbed unit) and speed up your turnover timeline.
2. Cash for keys - you release them for liability of their lease (Texas law allows this as long as all parties agree) in exchange for a discount (I.E. your last full month will be discounted/free if you sign a notice to vacate for the end of next month). This will also speed up your timeline and allow you rehab more quickly.
Some people will not want to move at all and there is no incentive to rehab their unit for you unless they agree to a higher monthly rent.
In those instances it is waiting game until their lease is up and you can force a rent increase.
Hope this helps.
I did this a few years ago. Owner occupied a 3-family and had some extensive renovations done (full re-wire, adding insulation, roof replacement) with tenants still in place.
For things that caused a major nuisance I offered heavy discounts on rent for the months of the inconvenience.
This was mainly just for the electrical work as the roof and insulation were done pretty quickly. I did, however, always coordinate with the tenants for the quicker renovations to try and pick a day or days they may be out of the house for a while anyway, or to make sure they didn't have guests coming over or other conflicts.
They were really appreciative of my consideration and I had no issues during any of the renovations.
Discounts are a good idea. And sounds like you coordinated well with the tenants. Thanks for sharing your experience and input!
Hey! A fellow Austinite.
There are a few strategies here - as a former Property Manager overseeing major unit rehabs, we would play musical chairs (move tenants into rehabbed units after they were completed for a discount (I.E. 20% off 1st full month's rent). This is managed 2 ways.
1.You can inform the resident that their rent will be going up to market value of a rehabbed unit when their lease is up, regardless of whether or not their unit is rented. This will do 2 things, encourage them to move into a rehabbed unit ahead of their lease expiration (and fill your vacant rehabbed unit) and speed up your turnover timeline.
2. Cash for keys - you release them for liability of their lease (Texas law allows this as long as all parties agree) in exchange for a discount (I.E. your last full month will be discounted/free if you sign a notice to vacate for the end of next month). This will also speed up your timeline and allow you rehab more quickly.
Some people will not want to move at all and there is no incentive to rehab their unit for you unless they agree to a higher monthly rent.
In those instances it is waiting game until their lease is up and you can force a rent increase.
Hope this helps.
Hey! A fellow Austinite.
There are a few strategies here - as a former Property Manager overseeing major unit rehabs, we would play musical chairs (move tenants into rehabbed units after they were completed for a discount (I.E. 20% off 1st full month's rent). This is managed 2 ways.
1.You can inform the resident that their rent will be going up to market value of a rehabbed unit when their lease is up, regardless of whether or not their unit is rented. This will do 2 things, encourage them to move into a rehabbed unit ahead of their lease expiration (and fill your vacant rehabbed unit) and speed up your turnover timeline.
2. Cash for keys - you release them for liability of their lease (Texas law allows this as long as all parties agree) in exchange for a discount (I.E. your last full month will be discounted/free if you sign a notice to vacate for the end of next month). This will also speed up your timeline and allow you rehab more quickly.
Some people will not want to move at all and there is no incentive to rehab their unit for you unless they agree to a higher monthly rent.
In those instances it is waiting game until their lease is up and you can force a rent increase.
Hope this helps.
I didn't even think to offer moving tenants into the rehabbed unit. I will definitely keep this in my back pocket if push comes to shove.
Thanks for the great advice!
Renovating an inhabited property requires a delicate balance between keeping the tenants happy and making the necessary changes. Here are some strategies you can use:
Plan the renovation around the tenants: Try to schedule the renovation work for a convenient time for the tenants, like when they are at work. You should also communicate with them and let them know the scope of the work and expected timelines to minimize disruptions.
Make temporary arrangements: If major work is being done, you may want to consider temporarily relocating the tenants to another unit in the building or offering them temporary accommodation elsewhere.
Phase the renovation: Instead of renovating the entire building at once, you can consider renovating one unit at a time. This approach ensures that the tenants are not displaced and can still enjoy the comfort of their home.
Hire professional contractors: Work with professional contractors who have experience renovating inhabited buildings. They should be able to minimize disruptions, provide safe working conditions, and ensure that the tenants' privacy is respected.
Offer incentives: You can offer your tenants incentives, like rent discounts, to compensate for any inconvenience caused during the renovation period.
In conclusion, renovating an inhabited multi-family property requires careful planning, communication, and consideration. The goal is to maintain a positive relationship with your tenants while upgrading the property to increase its value.
I’ve done this with a duplex I purchase last year. The roofing and septic tank replacement only took 1-2 days each, but I made sure to communicate w tenants ahead of time when to expect workers and when the “mess” would be done and cleaned up. I had to have electrical re-wired on one side, the other side was more cosmetic such as swapping out light fixtures that weren’t working, patching holes in the wall to prep for paint, etc. I coordinated times that worked for tenants but since it was all stuff making the home safer and more cosmetically pleasing the tenants were happy about it and had no complaints. For larger remodels such as whole kitchens/ bathrooms I’m waiting until the tenants move out at the end of the lease since this will have a bigger effect on their living space.