According to the National Multifamily Housing Council and the National Apartment Association, more than half of the existing apartment buildings in the United States were built before 1980, meaning there’s a good chance your multifamily property is ready for an upgrade. Ultimately, the goal for a renovation is simple: increased rent rates and a reasonable ROI. If you’re looking to increase rent in the coming years, consider the following six renovations:
- Wood (or wood-like) flooring that will last. The National Association of Realtors recently reported that 54% of home buyers were willing to pay more for hardwood. It follows that this bias likely extends to renters. However, when it comes to multifamily properties, what kind of flooring you choose will ultimately be influenced by the purpose of the space. Carpet will stain and often needs professional cleaning, yet carpet creates a noise barrier between upstairs and downstairs neighbors. Hardwood will require resurfacing and resealing over time and may result in more noise property-wide but has the modern, warm look tenants in many communities are looking for. However, you can achieve a hardwood-like look while keeping your budget in check. Engineered hardwood is made from resin, pressboard, and polymer then finished with a thin layer of hardwood. The planks lock together, rather than needing to be nailed to a subfloor, and can be placed on top of old flooring like linoleum and vinyl. Then there’s laminate, which is more affordable and easy to install, but it needs to be replaced rather than refinished once it wears out. As you make plans, keep in mind your goal should be something affordable, durable, easy to install, and low maintenance. To keep noise down and preserve some warmth, consider leaving carpet in bedrooms but utilize wood or a wood-like alternative in the rest of the unit.
- Bathroom tune-ups. Tenants are willing to pay for a clean, simplified, clutter-free bathroom. But just because you have stained or outdated tile on the wall or shower floor doesn’t mean you have to tear it out. A bathroom remodel can be as simple as paint, a deep clean, replacing grout and caulking, a new shower head, and a colorful shower curtain.
- Fixtures with less sheen. Faucets and door knobs in a shiny chrome are considered “standard grade,” reports RentPrep. Visually, your unit will appear more valuable if you upgrade to a brushed nickel or bronze. Once you’ve made a selection, be consistent throughout the unit. You want the same color fixtures in bathrooms as doorknobs, and don’t forget the hinges!
- Modern appliances. If you’re currently offering tenants mismatched appliances or appliances becoming outdated or in need of repair, start over. Tenants today want the microwave, dishwasher, oven, and refrigerator to match, in either stainless steel or black, and an ENERGY STAR label goes a long way. According to the U.S. Department of Energy, about 6 percent of a monthly energy bill is from powering a refrigerator 24 hours a day. That’s almost as much as lighting the entire apartment. Upgrading to an energy efficient refrigerator can save a tenant up to $80 per year. This directly represents how cost-effective it can be for building owners to invest in an energy-efficient appliance, and it’s this kind of savings that can justify higher rent rates. Another example–energy efficient dishwashers that can sense how long they need to run and how high to heat the water based on each particular load of dishes. In fact, if tenants will load dirty dishes directly into these dishwashers instead of rinsing them in the sink first, they can save up to 20 gallons of water per year. In all, following the U.S. Department of Energy recommendations for upgraded appliances will save each unit about $200 per year in water and electric bills, while also saving 18,600 gallons of water.
- Storage space. Even if your closets are reach-in rather than walk-in, invest in shelving that fully utilizes the vertical space and helps tenants see that it is not just for hanging clothes and extra coats. Floor-to-ceiling shelving throughout the rest of the closet, even if it’s only on one side, will reduce clutter in the bedroom by offering a space for books, boxes, linens, and more.
- A clean, smooth parking lot and drive. Curb appeal starts from the street, and if your parking lot is full of pot-holes, it’s time for a fix. Renovating a multifamily property for value-add isn’t just for interiors. You’ve got to take a look from the perspective of prospective renters driving by. It’s possible your driveway needs power washing and cracks filled and your parking lot needs a bit of paving work and re-painting.
Keep in mind that every year beyond your renovation date, you’ll recoup less ROI. Whereas in Year 1 you may be pleased with a 90 percent return, that could drop to closer to 60 percent in Year 2. That may mean your renovations only make you money for a specific number of years before they no longer make sense. It’s important to have a construction service on your side to help you prioritize, plan, and budget well. For assistance with planning and construction in the Southeastern United States, contact Alterra Multifamily Renovations.