Apartment Building Value Add

[Jason Newberg]

What’s up BP Family? Getting ready to close on a 12-unit building in South Carolina - Stoked! All units are 2bd/2ba townhome style units with W/D hookups and 1200sqft of living space. Kitchen finishes look straight out of the 80’s and the bathrooms don’t look much newer, but everything is in good (albeit dated) condition. With this in mind, our team will be putting capital against value-add opportunities. My question:

What are the best value-add opportunities to go after first? More specifically, for those of you in the apartment building game, would you mind sharing your value-add upgrades/improvements and the ROI you estimate you have returned on each item or group of items (I understand that, for example, it's hard to estimate the ROI on a kitchen reno if you also added a pool and play ground to the complex at the same time).

Things we’re considering:

- Paint kitchen cabinets white, butcher block counter tops, and tile backsplash

- Vinyl plank flooring on the main floor instead of carpet and 12” tile.

- New (SS) appliances
- Supplying W/D

- Clearing grass/weed/shrubs around part of one building for sitting/common area.

This is a (low) B class building, and again only 12 units, so it wouldn’t make sense to go crazy on the common areas, but I’m very curious to hear what others have had success (or not!) with?

Cheers!

[Danny Randazzo]

@Jason Newberg I think all of your five value add ideas are very good and should yield an increase in rent. What are the properties around yours like? For example, you could spend money on stainless appliances but if everyone in your sub market does not have them it’s a bit harder to get a premium because tenants will think about the total cost to rent. You also don’t want to be the highest priced 2 bedroom even if you are the nicest.