5 min read
Multifamily renovations can help you attract and retain residents, command higher rents and reduce maintenance costs. Renovating an apartment building may even be viewed as a less risky investment than acquiring a new one, particularly during an economic downturn, according to Fannie Mae’s Economic and Strategic Research (ESR) Group.
“For example, if fundamentals are at or above the competitive market set and you believe market conditions could soften soon, renovations could put a competitive moat around your property,” said Matt Felsot, Central Region Sales Manager, Commercial Term Lending at JPMorgan Chase.
But what property renovations should you make? And how can you finance the renovations? We offer some tips for renovating your rental property.
It’s generally best to make renovations when the rental market is strong. That way, you can see results sooner via higher rents and better renter attraction and retention. But renovating your apartment building can still be valuable in a down market. For example, if there’s a high vacancy rate in the area, performing renovations on unoccupied units could save you money long term.
Ultimately, the best time to renovate your multifamily property depends on several factors, including your:
Renovation opportunities run the gamut and include constructing additional bathrooms and bedrooms, installing smart technology and adding new roofing. “Investors typically like to see returns of between 10% to 40% on investment dollars,” Felsot said. Some of the renovations with the best ROI involve:
You may be able to pay out of pocket for some simple updates, but for more extensive renovations, such as installing smart solar panels or upgrading your HVAC system, you may want to consider different financing options. Multifamily renovation financing could include:
Once renovations are complete, get the word out through multifamily marketing.