Multi Family Rehab - All units, some or just a couple

[Oren K.]

I am starting the process of rehabbing a 39 unit ~50% occupied property. The property is  in a blue color / section 8 neighbourhood. Good bones but due to ownership dis-interested over the past years, many of the unoccupied units need a fair bit of work (Kitchen, Bathrooms, etc.). The occupied units also need work. I am finishing up the exterior / mechanical systems (Roof / Boiler / Tuck Pointing / Lot Patching) and now will start on the interior.

I am struggling with the question of how many units to to how fast. The PM company, who I do trust, is recommending just doing 2-4 units and seeing what the market uptake is. My inclination is to do more (10-12) for a couple of reasons;

• Better pricing on materials and labor
• I can be on site and so do more oversight
• If there is uptake, the PM has 'inventory' options

Looking for input / thoughts / experiences.

[Moses Kagan]

Agree with @Joel Owens You should follow the management company's advice. I would add that, if you have multiple unit types, you should try to ensure you renovate one of each. That will give you a sense for the variation in rents and allow you to plan the next phase for optimal returns.

If all of your units are pretty much the same, here's another trick: Try varying the renovation a bit (eg different colors, flooring, etc.). You may find that one style is much more popular than the others. Then you can use that style for the rest of your renovation. We've successfully tested flooring, ceilings and appliance colors like this and it can make a surprising difference to achievable rents / leasing velocity.