Average Cost to Update Apartment for Repositioning?

[Hannah Hammond]

Hey BP!

For those of you who have experience with repositioning apartment complexes, what have you found to be the average cost per door or sq/ft to update each unit (new paint, floors, maybe counters) in a B to C+ area? I know this number can very greatly but a ball park number that's typical to shoot for will help. Also, do you typically hire sub contractors to do the work or a GC? Any input would be awesome, thank you! 

Hannah Hammond

[Account Closed]

@Hannah Hammond Can you explain what you mean by repositioning?

[Hannah Hammond]

@Account Closed

By Repositioning I mean value play. Adding value by increasing rents, etc in order to increase income and therefore increase the value of the property. Essentially a "Fix & Flip" with an apartment complex rather than a single family home.

[Account Closed]

@Hannah Hammond Thanks for taking the time to explain that. I learned something I didn't know!! Well.....something ELSE I didn't know :-)

[Nick B.]

Anywhere between  $5000 and $20000 per unit.

[Jeff Kehl]

@Hannah Hammond as you said this number will vary greatly. Are you taking just interior renovation? What area are the apartments in? How old are they?

Having said that @Nick B. gave you a good range. To get a better idea we need more specifics. 

If you have done single-family you know how this works. New paint? One/Two/Three tone? a couple dollars /square foot for a quality painter.

Flooring? Vinyl, Tile, Carpet Hardwood? $2-8/sq foot.

Cabinets, resurfacing or replacing?

Counters, laminate, tile, granite, quartz?

Appliances?

Doors? Windows?

[Tamiel Kenney]

It is also important to look at other properties in the area to determine what level of upgrade is ideal for the area.  For example, if nobody in the area is putting in granite or stainless appliances, then you have to make a decision if you want to be the first one in the area to do it.  I would be cautious being the first one because you could end up improving too much for the area and not getting the rent bumps you need.  You can also try different levels of rehabs and see what type of response you get from prospects.  Engaging a good management company to help determine the level of upgrade that is appropriate for the area. 

[Andrew Campbell]

If we're just talking interiors, we usually put $5000-$8000/door.  But agree with all the advice here--its wildly variable. Are you resurfacing counters and painting cabinets, or replacing both? 

[Michael Noto]

@Hannah Hammond There has to be someone in your area of AZ that does exactly what you are trying to find the answers to.  Estimating repair costs and what renters expect is a very local game.

[Gerry Swartz]

@Andrew Campbell, thanks for your response.  What monthly rent bump range would you expect for this range of investment?

[Andrew Campbell]

@Gerry Swartz. It obviously depends on the market, but we aim for $100-$125 as an average.  We may do resurfacing of counters and a "bronze" package on some units to get $75 bumps and then spend $7500 on a gold package to get $150.  In my Texas markets, those are pretty good ballpark figures to run quick numbers before doing a full underwriting. 

[Mario Brown]

I've averaged $11,500, too many variables w/ material and labor to feel comfortable giving you a rule of thumb for your pro forma however.

[Brian Garlington]

Hannah did you ever move forward on Multifamily Repositioning?