“Happy are those that dream dreams and are ready to pay the price to make them come true” Leon Suenes

I was recently talking to a colleague who built a small ADU starting with a converted garage. She is now getting $1850. per month for about 450 square feet of living space. It reminded me of a client I had a few years back who purchased several identical fourplexes in Long Beach.

He was a licensed contractor, so he decided to convert the units for a better return. The original building consisted of (1) 3 bedroom unit and (3) 2 bedroom units. They were good sized buildings at over 5100 square feet per fourplex. He left the 3 bedroom unit as it was and converted the other three ending up with (2) 4 bedroom units and (2) 3 bedroom units.

Since the buildings were identical and on the same street, he repeated the process for all the buildings. At the end, he was able to rent the units for substantially more without adding a single square foot.

WOULD YOUR UNITS BE GOOD CANDIDATES? I see, quite often, units that are unusually large, such as 100 square foot 1 bedrooms, or very large studios units. Many times, the construction of an additional wall can give you another bedroom or more. This can result in a rise in income, thus creating a rise in the value of your building.

TALK TO A CONTRACTOR How much will your proposed changes cost? Are they even viable? Always a good idea to speak with a LICENSED CONTRACTOR to make sure that the changes you have in mind will work. Also the contractor may some additional ideas that could save money or result in a unit that will produce more income than you had originally thought. Your contractor will be able to confirm the viability of your project with the local municipality, as regulations do change.

MORE USEFUL UNITS EQUAL LONGER TERM TENANTS. Even with a lot of square footage, a studio or a 1 bedroom presents limitations for your tenants, especially if their family expands. If you are able to convert your units to a larger number of bedrooms, your tenants will likely stay longer, which can reduce vacancies and turnover costs.

Just an idea to help maximize the rentable space you have WITHOUT adding an ADU or taking on a major construction project.

“The more difficult the victory, the greater the happiness in winning.” Pele

What we at PRS PROPERTIES CAN DO. We can recommend experienced licensed contractors who can perform the work and help obtain the required building permits. We can also discuss with you the current rents in your area and supply you with comparable rental prices for similar properties to make sure that your proposed changes will result in the return you are looking for. We can also look at your building for changes that might allow you to get a higher value in order to create value without huge expenses for your building. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We always have many investors who are looking for “as-is” properties and are willing to purchase with low rents, a moratorium or even with a problem tenant in place. We have put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.