Strategy for overcoming deferred maintenance?

[Kim Wendland]

28 class B SF properties built in the 60s. minimum maintenance over the last 20 years. What are the best strategies for overcoming large deferred maintenance?

[Bettina F.]

Wow -- this is going to be a project.  Hope you got a screaming good deal.

You are going to have to prioritize.  Inspect the properties. First priority is going to be deferred maintenance causing ongoing structural damage -- like leaking roofs causing more wood rot.  Try to get a volume discounts from all your contractors.

You may need to sell individual properties to get the cash to continue the rehabs.  Identify the properties that have the highest resale potential.  They are priority #2.

With 28 properties, you are bound to have some vacancies (unless your rents are WAY too low) .  As units become vacant, improve, paint, replace rotted floor in bathrooms, new flooring and countertops.  Do not over improve. Flip or raise rents.  Develop a standard inspection list for all properties and parts list.  (Make your own pick list -- do not ask tenants, it will be never ending!)   You should be able to keep teams working steady if you have the cash to fund 3-4 rehabs at a time (the flooring guys install in 123 Elm Street and then move onto 125 Elm Street)

If you are keeping this portfolio as rentals, this is a great time to standardize colors, flooring and appliances to make future turnover easy peasy.

 I know some rehabbers who act as their own general contractors.  They order the ALL the supplies needed for a rehab from Home Depot pro desk, get the 15% discount and free delivery.  You will have to provide security if you go this route to make sure supplies are not stolen.

It seems daunting, but you will get more efficient and it will get easier.  I have never done a project this size, but when we stared rehabbing apartments, it just got easier and easier.   Invest in some project management software to help with scheduling teams.