As landlords and syndicators, our job is to preserve the investments we have made in our multifamily deals. Typically, A & B Class properties have many amenities and are newer and are in better overall condition. If you own an older, C-Class property, a little luxury can go a long way. As buyers of this asset class, we are looking for good neighborhoods in desirable area – preferably a B-Class area – that may just need need simple renovations or upgrades. By doing these three renovations, you can attract tenants that will pay at the very top of your market:
1. Get Stainless or Black Stainless Appliances
Stainless steel and black stainless kitchen appliances are durable, look great and shows as fresh and modern and high-end style. Installing a new appliance package – a refrigerator, stove and microwave – you will be able to pull in more rent because people love their kitchens. This simple update could pull in $75-$150 more per month per unit, getting you a very healthy return. Many will justify paying the extra rent because the newer appliances are energy efficient. You could save some money buying 5 or more appliance packages from an wholesale or distributor appliance store.
2. Install New Flooring and Kitchen Decor Accents
Installing laminate vinyl plank flooring is one way to make an instant positive impression when they walk into the unit. The modern feel of an ash wood on a grey wall with white trim feel modern and fresh. What’s more, that flooring will me much more durable than carpet. You can also install modern backsplashes and upgraded lighting in the kitchen. It brightens up the room and looks amazing.
3. Improve Overall Curb Appeal, Exterior and Entryways
Aside from keeping the exterior clean from debris, painting the windows, putting up exterior louvered shutters on certain buildings, and trimmed up landscaping will give your property excellent curb appeal and a great first impression when the tenant shows up to the property. You can take it a step further and improve the vestibules at the property. When a tenant walks in, they make an emotional decision on whether they like what they see. It must be clean, secure and make the tenant proud to call home.
Getting a boost in rent from the bottom of the market to the top of the market through these renovations will give you a higher NOI, driving the overall valuation of the property higher because of the higher cap rate. Many landlords have been able to bump rents 10% to 30%.
Not all of these 3 things makes sense for every multifamily deal. Before you commit to a renovation, think about what makes sense for the tenant profile, the history of how the previous tenants have treated the property and how much should be invested. For instance, if tenants are notoriously hard on the carpets and they only stick around for 12 months at a time, consider a better laminate flooring. It is much more money upfront, but you shouldn’t need to touch it for years, especially if the installer offers an extended warranty. Again, make smart changes that will appeal to the tenant profile and always look to preserve the value of your investment.