Rent/Utility Changes for New Partial MTR Acquisition

[Ryan Lewis]

I have recently purchased a 22-unit multifamily property; Class B- in a market with a lot of transient workers.

To keep it brief, the business plan calls for the following:

   1.) Over 8 months, furnish 6 units as MTR's at premium rent (still a bit below market for local MTR's for year 1).

   2.) Transition tenants to paying their own power, cable, and internet. Property covers water/sewer and trash (market standard).

   3.) Raise low rents to market.

   4.) Minor exterior renovation to update space.

I created a schedule showing increases to rents, estimated move-outs due to changes, swapping those vacant units to MTR's, and reducing the property's utility obligations. I intend to turn units to MTR's in small batches of 2's every other month, which means I actually need some vacancies. For reference, average rents for the primary types (20 of 22) need to come up about $50. Regarding utilities, the property is currently paying cable and internet for all units, and needs to only cover internet for the 6 MTR's. It is also currently covering power for at least 11, which needs to become 6 as well for MTR's.

Obviously, there is a delicate line between needing vacant units for MTR turns, needing to maintain low overall vacancies, and needing to adjust rent and utilities to market numbers. Looking to others for experience in how to implement large scale changes strategically in a way that doesn't become self-defeating and hurt bottom lines unnecessarily.

Thoughts?