Add Value Without Disrupting Tenants
Investing in multi-family residences can be lucrative. To make it more profitable, however, you have to consider a value-add play. Value-add plays occur when you purchase a building with units below market value, renovate them, and adjust the rent to a more fitting price for an updated living space.
The obstacle that most building owners have, however, is renovating without disrupting the current tenants.
Try Exterior Renovations First
Sometimes, a facelift to the outside of the building is all that you need. Add a fresh coat of paint to the exterior walls, add a garden, or update an existing courtyard. Spruce up the building not only to lure in new tenants, but to make your current tenants happy as well.
Strategize With the Interior Renovation
Focusing on interior renovations is more of a challenge when you have tenants. One way that you could handle it is by offering a menu option. If one of your tenants’ lease is expiring soon, go to him or her and explain that there will be a small rent increase. With the small rent increase, offer to make the unit better. Offer the renovations, such as new appliances, ceiling fans, washers, and dryers, or fixtures.
Other options include offering tenants a chance to move into newer units with an updated price, rolling out the renovations, or outright asking tenants to move out while you renovate. The last option could be more difficult if you rely on the income from rent.
If you are making changes to common areas such as the lobby, gym, laundry room, etc. be sure to communicate clearly with the tenants. Inform them of the work as far in advance as possible so they are not surprised when work begins. By letting them know when the work is starting and how long it is going to take, you allow them to make arrangements if necessary. For example, someone who relies on the gym for their daily workout will need to find an alternative and they will appreciate the extra time to look for a temporary gym.
Renovating a multi-family residence can add value to the building. If you’re interested in earning more money or bringing your building up to the same level as surrounding properties, renovating is a must. For more advice on how to renovate your building with minimal disruption, contact us today by calling 410-609-5564 or sending us an email!