Are you ready to take on the exciting challenge of renovating a multi-family real estate property?
Recently, I was on Axel Monsaingeon’s “The Very Real Estate Effect” podcast where we discussed how to do exactly that. Because truth is, renovating a multi-family property can be a SUPER thrilling experience… but it’s not for the faint of heart.
From understanding the local market and determining your budget to managing unexpected challenges, there are many factors to consider. But with careful planning and execution, you can successfully transform your property into a valuable and desirable asset.
So if you’re ready to roll up your sleeves and get to work, here are five steps to guide you on your journey to a successful renovation.
Let’s get started.
Step 1) Stalk The Competition (Shh…!)
Before you even think about lifting a hammer or painting a wall, it’s essential to conduct an in-depth market study. This means actually getting out there and exploring the competition. Take a tour of similar properties in the area and see what they have to offer, and ask yourself:
“What are their selling points?”
“What amenities do they have that I might be lacking?”
Next, take a look at properties in the next tier up and figure out what it would take to get your own property to that level.
Remember — one of the main goals of renovating a multi-family real estate property is to increase your rents by $300 to $500 per unit. So as you explore similar buildings and those in the next tier up, pay special attention to the rents they are charging.
By understanding the market and what it takes to move up to the next level, you can make informed decisions about your renovations and increase the overall value of your apartment complex. Don’t skimp on this step – a thorough market study is the foundation of a successful renovation plan!
Step 2) Set Your Budget
Once you have a clear idea of your goals for the renovation, it’s time to get a handle on your budget.
This means considering all the costs associated with the renovation, from materials and labor to any unexpected expenses that may pop up. It’s essential to be realistic about your budget and not overspend, as this can lead to problems down the line.
Make sure to allocate enough funds to cover all necessary renovations, but also leave some room for flexibility in case unexpected expenses arise. Managing your budget is a key component of a successful renovation, so take the time to carefully plan and allocate your funds.
And remember: a little bit of extra planning and budgeting now can save you a lot of stress and headache in the future!
Step 3) Sit on Your Hands for 30-60 Days
Before you start tearing down walls and picking out new fixtures, it’s important to take a step back and wait a bit. (Trust me, this extra time can be absolutely invaluable!)
For one thing, it will give you the chance to discover any hidden issues with the property that could impact your renovation plans and budget. Maybe there’s some unexpected water damage that needs to be addressed, or perhaps there are structural issues that you didn’t know about.
By taking the time to thoroughly assess the property, you can save yourself a lot of headaches and avoid required repairs with no ability to pay for them.
In addition to uncovering hidden issues, waiting a month or two before starting renovations also gives you the opportunity to come up with a more detailed and well-thought-out renovation plan. Instead of rushing into things, you can take the time to carefully consider your options and make informed decisions about what renovations will truly add value to the property.
So don’t be afraid to sit on your hands for a bit before diving into renovations – it will pay off in the long run!
Step 4) Start From The Outside and Work Your Way In
When it comes to renovating a multi-family real estate property, focus on the outside first.
Why, you might ask?
It all comes down to curb appeal. The outside of your property is the first thing prospective tenants will see, and if it doesn’t impress, they won’t even pull in the drive to tour.
That’s why it’s so important to make any necessary repairs and add attractive features like landscaping, outdoor lighting, and seating areas. These elements not only make the property more appealing, but they also show potential tenants that you care about the overall look and feel of the property.
Don’t stop there – the amenity package is also key to attracting tenants. Are you offering a pool, fitness center, or other desirable amenities? If not, now might be the time to consider adding them.
By focusing on the outside of the property and the amenity package first, you can make your property stand out and attract the best tenants.
Step 5) Be Flexible and Reassess Your Plan
As you progress through the renovation process, you must be willing to reassess your plan and make adjustments as needed. This is because things will inevitably come up that you didn’t anticipate, and your priorities for what needs to be renovated will change over time.
For example, you might find that some things cost more than you thought, or you may discover that some renovations are more important to potential tenants than others.
One way to stay flexible is to keep an open line of communication with your property manager. They may have insights into what tenants are looking for and what renovations will add the most value to your property.
For instance, in Florida you might find that a dog park is a major selling point, as people absolutely LOVE their pets and are willing to pay more for a property that caters to them. By staying open to feedback and being willing to adjust your plan as needed, you can ensure that your renovation is a success.
To gain a deeper understanding of each step, click here to watch and listen to the full podcast with me and Axel Monsaingeon!
Disclaimer: This is not an offer to buy or sell any security.
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