What Is A Major Renovation?

WHAT IS A MAJOR RENOVATION?
A major renovation of an apartment is usually defined as one which takes more than 30 days to complete and requires a building permit. This would include a bathroom or kitchen remodel or maybe even reconfiguring a unit by adding a wall. For instance, making a one-bedroom unit into a two-bedroom unit.

WHY DO IT?
In most cities, doing a major renovation could allow you to charge market rent for an underperforming unit. Additionally, with a modern kitchen or bath, it would be easier to rent the unit. You would not only command a higher price, but you could attract a larger tenant base giving you a choice of interested tenants. It could also make the process quicker each time you have a vacancy.

VALUE ADD
Many larger investors purchase buildings that are well-located but in need of repairs, poorly managed, and underperforming. I have seen such owners take an older building and give it new life in a relatively short period of time. With current rent control ordinances, the alternative may be to be under the market forever because it can be impossible to catch up when your rents are severely under current market amounts. If done correctly, your upgrade will not only generate additional rent but will improve the annual Gross Scheduled Income of the building. This will add value when you sell or refinance.

DO YOUR HOMEWORK
Always check with your attorney and your local apartment association regarding any moratoriums or other rulings currently in place which could affect your plans. Before you move ahead with a potentially expensive upgrade, you want to make sure there are no current or upcoming restrictions. Talk with your contractors about time and difficulty obtaining permits in your city.

What we at PRS PROPERTIES CAN DO. We can discuss with you the current rents in your area and supply you with comparable rental prices for similar properties. Before you hire a manager, make sure the compensation is fair to you! 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.

Remember – KNOWLEDGE IS POWER!