How to renovate/turn Multi-Family while occupied?

Question

I’m looking at acquiring a 16 unit multi family complex. Overall it’s in decent condition but does need some light renovations. For instance the interiors have outdated wood paneling that should be replaced with sheetrock. Counters could use an update as well.

How have others done this while the units are occupied? Would love suggestions, best practices, how you have done it.

Arn Cenedella · Answer

@Matt M.

My suggestion would be to renovate as tenants vacate.
I would give existing tenants a gentle rent increase and maybe one moves.
Renovate that unit when vacant.
Offer renovated unit to existing tenants at the new rental rate and I bet you will find one that moves - creating your next vacancy to renovate and raise rent.
Repeat process.
Hope that helps.
Arn

Eric Johnson · Answer

Matt, you'll most likely have to stagger renovations as leases are coming due. Analyze the lease expirations and see what that schedule of renovations would like for each unit.

Tyler Lynn · Answer

So what Arn said is spot on. There is really no way to do this with tenants in the units. I would raise rents to what the market ask for at its current conditions maybe slightly more since the goal here is to renovate. Some will move out, renovate those units first. If the renovated units will get you substantially more in rent because the previous owner never raised rents you could even offer cash for keys. This is basically paying tenants a couple hundred dollars to move out early. I would only advise this if you have the reserves to be able to pay the mortgage while you quickly renovate the units and get them back leased up. Good luck!

How to renovate/turn Multi-Family while occupied?

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