What improvements can add the most value and rent increases for multifamily investment property owners?
Reality TV shows have made rehabbing and renovating real estate many people’s dream. Still, when it comes to investing for profit, it is essential to look at the math and make sound, objective decisions. Far too many traditional property improvements and upgrades actually lose money. Adding nicer flooring, upgrading mechanicals, and renovating kitchens might sound exciting, but it may not add a dollar to your appraised value or income. Here are several upgrades that renters really want today and that may generate some of the best rent bumps for multifamily landlords.
6 Upgrades That Add Top Value to Your Commercial Investment Property
Rooftops are too often overlooked and underutilized spaces in the multifamily sector. Outdoor space in general has been one of the top factors influencing homebuyer decisions for several years, and we can see by what new condo and apartment builders are doing that it matters a lot in leasing too. Affordable options for roofs include sustainable gardens and vegetation for insulation, as well as lounging and entertainment areas featuring outdoor furniture. Tenants can sell themselves on accepting smaller rental units if they have great community spaces to use and show off to friends.
2. Washers & Dryers
Multifamily Executive points to laundry facilities as upgrades for adding value. Case studies have shown that this amenity can add from $50 to over $300 per month in rents. How much any of these improvements truly boosts rents and net income can vary widely based on location and demographics. So carefully look at your local math before making a final decision. In some areas and buildings, you may be better off adding a community laundry space or simply putting in wash and dryer hookups and letting tenants take care of the expense of their own appliances.
Fitness facilities are probably still the number one, most in-demand amenity for multifamily properties and communities. Commercial gym equipment may not be inexpensive, and there is always liability to consider. Still, it is an addition you can make in one space that can add value to all of your units at once. Some properties even offer fitness classes like yoga and spinning. You can bring in personal trainers and instructors and simply let them advertise and take a percentage of any money they make without adding to your overhead.
4. Fast Internet
Fast internet is only becoming more important. With as much as 60 percent of the population already working remotely or from home and millions more expected to do so in the next few years, it has become a basic utility, not a luxury. Providing community wifi—or at least being wired for high-speed service—can offer a lot of value and may even help your renters pay their rent on time. If you’re remodeling unit interiors, consider upgrading outlets with USB sockets and adding more outlets to accommodate today’s booming number of devices used.
Related: 4 Ways Technology is Shaking Up Commercial Real Estate (& Why Multifamily Will Pull Ahead)
Door improvements and upgrades can offer some of the highest ROI options for real estate investors in general. This can be as simple as painting, to replacing door hardware, and even installing smart locks.
6. Kitchen & Bathrooms
The kitchen is the go to generally in a unit, and it should be as up to date as the living room or any other essential space in the unit. Consider adding tile backsplashes along with granite counter tops to enhance the visual look of the kitchen.
The bathroom can be one of the major make or break features from a tenants’ perspective as well, keep quality and style in mind when upgrading this area in the unit. Upgrade the vanity along with flooring to help this area stand out.
There are many ways to beautify and update commercial investment properties. Many may cost you money, without adding anything to rents or property value. Look for affordable improvements that renters will really pay more for, and which offer the best ROI, which in turn will increase the properties’ NOI. The above can be great items to start researching for your next multifamily deal.
What are your favorite upgrades?
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