How to Add Value, 12 Unit Complex. Any Ideas?

Question

I own an apartment complex that has been a huge value add project so far. I have finished off the front five 3-bedroom apartments (started with studs) and completed a cosmetic remodel of the back 5 Apartments. I have a huge lot 1.5 acres and will have completed an on site laundry facility and am drawing up a 12 unit storage facility. In 2019 I will be using RUBS to externalize Water/Sewer/Garbage back to the tenants. Any thoughts on how to add more value? I have an area that is about 20x20 and another that is 40x80, and another that is 40x120. Per the county I am tapped on adding housing units, my current 12 are grandfathered in.

John Lenhart · Answer

This is nickel and dime stuff but everything counts. 1) could you contract with the cable company to get a kickback for tenants who sign up with them2) could you sell renters insurance to your tenants and get a small kickback3) if your electric is deregulated, you could get a small kickback from the electric company for choosing which plan the tenants use.A lot of this may be regulated by the state you are in so not sure if it will work. Also, it is di-minimus income but easy to do once it is in place

Justin Thiesse · Answer

@Kai Van Leuven I personally have done this too. I would scrap the storage units and build garages. This will attract better tenants and rents I would not want non tenants on the property renting storage units. I have also raised laundry prices to match any nearby laundry mats. A secure building will also bring higher rents.

Luke Sass · Answer

@Kai Van Leuven It’s sounds like you’ve gotten all the low hanging fruit, another couple things that come to mind Is reducing boring expenses that people typically dont shop or spend alot of time addressing; -taxes ( I don’t know how tuned in the city is to your remodel but you want to spend a little effort ensuring you don’t get hit with a property tax increase ) - I’m not sure the type of tenants your looking to attract but a playground might go a long ways to adding value -Insurance ( anything you cad do to reduce your insurance?, security cameras, moisture sensors etc might pay off) a quick call to your insurance agent to ask for a list of things that will reduce your premium is usually worthwhile.

Kai Van Leuven · Answer

What sizes did you do on the storage. I was thinking like a 12x16 each or a 12x20 each. So a building that was 144x20 or 144x16. Also, did you steel frame or stick built? I am leaning towards stick. Can you tell me about your project and what type of results you had? Thanks.

Kai Van Leuven · Answer

@Luke SassI will call insurance. I did that last year with flood and shed about $3,300 in annual premium but could do it on the fire ins. policy. I like the playground idea. I was offered one but I have had too many fires to put out to go pick it up.I hope the tax man avoids my property for the next 10 years... I was kicking around pet rent but my wife is super opposed to it. Is it a standard for all apartment owners?I appreciate the input!

Kai Van Leuven · Answer

@Bjorn AhlbladI have unfortunately sunk way way way too much into this place. What was done really needed to be done. The place was more run down than anything I have ever worked on but the location makes it all work out. I have just started to keep track of the return on investment starting with the storage unit. It was really the only "extra".Do you have garages? What do you charge?

Luke Sass · Answer

@Kai Van Leuven Couole thoughts on the pet policy. Yes it’s fairly standard to charge an additional security deposit ( as carpets will most likely require additional attention for pet hair). You should be able to charge an extra $10-&15 a mo for the pet. - call a couple apartments in your area and tell them you want to rebt but you have a dog abd see what the additional charge is. -There is additional wear/tear on your building as well as risk from allowing pets ( no pit bulls) and you should get compensated for it. -Every now an again you run into someone who is allergic to pets and it causes a ruckus.

Bjorn Ahlblad · Answer

Kai, I have a 12 unit as well and have been wrestling with the same considerations-value add and generate more rent. Kitchens and bathrooms offer big pay-back as do garages. I have not had enough turnover to get in and do much, just paint and flooring. Sounds like you have made a considerable investment in your project. Are you measuring the incremental rent return on your improvements? In my case I have decided to do minimal/moderate improvements, keep this building pretty much as it is since I am able to increase the rent quite a bit anyway, and do a repositioning with my next MF investment. All the best with your investments!