Should we sell "as is" or add on and upgrade our apartments?

[Tabi Traughber]

Hi all! My team currently owns fifteen apartment units, ranging from studios to two bedrooms.  We are currently only charging $650/month for rent for the studios and a little more for the one and two bedrooms.  We are contemplating whether we should sell all of them right now, "as is," sell only a block of units or add on about 10-12k sq ft, which would include a gym, possibly a clubhouse and about 15 more units; thus increasing the value and then selling... What are your thoughts? Thanks in advance!

[Mark W.]

Hi @Tabi Traughber, 

There are a lot of things to consider, but which path you take is going to come down to how much capital you have access to and the comparable rents in the area. Go price shop the other apartments in the area to see what they are charging per SqFt and what upgrades/amenities are getting a premium (e.g. upgraded appliances, cabinets, light/plumbing fixtures, etc). This will give you and good idea of where you can take your rents and what kind of investment you will need to make to get them there. 

The nice thing about apartments is there is a direct link between the net operating income and value of the property. So, it might make most sense to unlock the value before selling. 

Feel free to PM me if you want to dive deeper. 

Mark