Multifamily investing has never been hotter. Multifamily apartments that are in great condition are fetching some of the highest prices seen in years. On the other hand, older dated properties are selling at much lower rates. If you have an older apartment complex that has become a little dated, now is the time to consider making some strategic upgrades. It’s time to focus on upgrades that will deliver a big bang for your buck in both rental rates and sales price (when you decide to sell).
However, not all upgrades are equal. You want to consider upgrades that will give you the highest return and maximize your property’s value. Before you get started, remember to do your research. Make sure the enhancements you do are appropriate for your area, tenant base, and property. You need to know what will make the biggest impact in your area.
We’ve put together a list of 5 upgrades that should be considered for your multifamily apartments. These enhancements have been proven to refresh an older complex and deliver a high return for your investment dollar.
5 Essential Upgrades to Your Multifamily Properties
- Paint – There is no other single item that can dramatically change the look and feel of your property for less money than new paint. Adding color to the interior or exterior of the complex can make your apartments feel fresh, new, and cared for. It can bring new life to any property, and your tenants and prospective tenants will notice it. Pick colors that fit your area and that are soothing to your tenants.
- Appliances – Residents love new appliances. If you have old and dated appliances, consider replacing them. It’s not uncommon for apartments with new or upgraded appliances such as stainless steel or black to fetch a premium rental rate.
- Fixtures – Some of the most subtle and inexpensive items that you can upgrade are the fixtures: lights, pulls and knobs, doorknobs, and towel bars. These items can be very inexpensive, but can deliver a lot of impact. They can make it easier to lease your apartments and get more money from them. Nothing says dated like brass. Consider changing from dated brass to stainless steel, satin nickel, or oil-rubbed bronze.
- Countertops or backsplashes – Avocado countertops and dated backsplash colors are also items that can quickly date a property. Consider changing them out to modern, neutral colors and you’ll be amazed at the transformation. Both of these items can cost very little to change, but your tenants will love them.
- Common area amenities – Here is where you can make a big impact by doing small things. Consider changing a dated courtyard to a new fire pit or fireplace. Supplement the old landscaping with new modern plants and color. Consider changing out the old playground equipment for newer equipment, or adding new planters and chairs to the pool area. These upgrades can be very cost effective, and really improve the look and feel of your complex.
Now is the time to take advantage of strong multifamily market fundamentals. But, to do that, you need to maximize your investment. If your property has become a little dated over the years, it’s a great time to consider a little updating. These upgrades will allow you to enhance your rental income as well as deliver the highest purchase price when you sell. Focusing on enhancements that will deliver the best bang for your buck will have your tenants, your property, and your billfold thanking you. They will also allow you to maximize your property’s value in a hot multifamily market.
Photo: Dieter Weinelt