Rehab Costs

[Kim H.]

I have been reading about construction costs for rehab on MF units. How do you find good quality, but low cost per unit construction? Do you use the large national apartment remodeling companies or local people? I have used "low cost construction" in the past and I got what I paid for. I am anticipating a total interior rehab on 9 units (averaging about 1000-1200 sq ft each) and I was hoping to keep the cost below $200K, but after reading posts on this forum, it looks like I could spend a lot less than that if I really knew what I was doing (which I don't). Any recommendations for the Dallas area? And should I do them all at once for cost savings or one unit at a time? I am not looking for top of the line with granite and travertine... just basic and clean.

[John Chapman]

I think you kind of hit the nail on the head with "you get what you pay for" with low cost construction. I'd also be loathe to go super cheap on a nine-unit. Liability for shoddy work (e.g. electrical fires) seems much greater due to shared walls. Off the cuff, if you are just doing interior, you should be able to do way, way less than $200K for nine units. That's more than $20/foot. I usually hit that number on SFRs also when I'm doing foundation, HVAC, and other larger renovations. I would also renovate with an eye toward durability (which I'm sure you know) Lower your make ready costs, for example, with durable flooring like tile, where you can.

I also wouldn't rule out granite, if I were you. As I recall, your units rent for about $1100/month. Granite is super durable and is one of those things that make tenants salivate. It's not that much more expensive and is one of those things that can really make your unit stand out (and lower your vacancy rate).

In terms of where to start trying to find, I would start networking to find a good GC. (I realize that's so general as to be unhelpful.) Just start talking to people and shop around. Get multiple bids and the knowledge will come very fast. I can recommend one that local investors use. He's not cheap, but not super expensive. I've never used him because I (probably stupidly) GC my own stuff. Let me know if you want his info via PM