Tactics for Rehabing an Inhabited Multi-Family

[Wesley Berry]

Hey everyone,

I plan on BRRRR-ing a small multi-family. I am most likely going to end up with a semi or fully inhabited property.

What are some strategies you have used or know about when renovating an inhabited multi-family? Or do you wait until there is a vacancy?

My concern is the tenants' comfort and their right to privacy.

Thanks in advance

[Issac San Miguel]

@Wesley Berry

Hey! A fellow Austinite.

There are a few strategies here - as a former Property Manager overseeing major unit rehabs, we would play musical chairs (move tenants into rehabbed units after they were completed for a discount (I.E. 20% off 1st full month's rent).  This is managed 2 ways.

1.You can inform the resident that their rent will be going up to market value of a rehabbed unit when their lease is up, regardless of whether or not their unit is rented.  This will do 2 things, encourage them to move into a rehabbed unit ahead of their lease expiration (and fill your vacant rehabbed unit) and speed up your turnover timeline.

2. Cash for keys - you release them for liability of their lease (Texas law allows this as long as all parties agree) in exchange for a discount (I.E. your last full month will be discounted/free if you sign a notice to vacate for the end of next month).  This will also speed up your timeline and allow you rehab more quickly.

Some people will not want to move at all and there is no incentive to rehab their unit for you unless they agree to a higher monthly rent.

In those instances it is waiting game until their lease is up and you can force a rent increase.

Hope this helps.