Adding amenities in a C class apartment

[John Warren]

Hi Fellow Apartment Investors,

I am currently under contract on a 36 unit apartment complex in Springfield, IL. The property is a class C property, but it is 2.1 miles from the University of Illinois Springfield. The University has a large population of exchange  and graduate students, and I am very interested in trying to attract them to this property. I am looking for ways to add value to the property and potentially attract a better class of tenant. Have any of you done the following, and if so how expensive/useful was it?

-Added a fenced in dog run/dog park. The property has a 2.1 acre lot, so I could easily create a fenced area to attract pet lovers. 

-Added a playground. 

-Added grills/picnic tables

Thanks in advance!

John

[Andrew Johnson]

@John Warren You might find yourself in a catch-22 and here's what I mean.  Let's see you have those Class C tenants right now.  It sounds like you don't really love them.  But, well, they're there and paying rent so you can't really give them the ol' boot.  I've looked at two apartment buildings with either large courtyard or adjacent lot that came with the deal "free".  Of course, the seller agent talks about value add with a picnic table, park-like area, play area for kids, etc.  Then after talking to a few people I figure out there USED TO BE a picnic area.  What happened to it?  Tenants destroyed the picnic tables (who knows how)...in 30 days in one property and less than 90 on the other.  I also can't fathom what having a playground would do to your insurance.  Along the same lines, I can't imagine having grills with hot coals would fill an insurance company with joy either.  Now to be fair, one was in an area I'd like think was C or C- and the other was maybe D+.  If you have a solid "C" area and think you can really attract better tenants, surrounding buildings are nicer, etc. then you could have some value add opportunity.  But if your kitchens are linoleum instead of tile (for a random example) or there are popcorn ceilings or there is wood paneling on the wall you might be able to better spend some rehab money in the units rather than on amenities.   

What I think might be more attractive (with large upfront cost) is looking at how to get super duper high speed wi-fi or wired internet access for the complex.  Offering a "free internet" to college students can't be a bad thing.  Just make sure it can handle a bunch of 19 years old binging on Netflix at the same time.  For them it's a tangible savings but maybe if you talk to the cable company or internet provider they can cut you a deal since it's 36 units.