When ever a vacant unit comes up at a property, which can be rarely if you run the place right, there is a question of what need to be done to it to get it rent ready. Sometimes it’s just touch up that’s needed, but there comes a point when a property needs more.
When I first started out owning multifamily properties I had to come to terms with the fact that most owner don’t care too much about their properties and when they are sold they do need work right away or they will need work when any tenants move out, that is unless you buy that rare property that had a good steward. Over the years any unit that became vacant usually got a good overhaul. Not all of them have, since some units are still occupied by the same tenants 10+ years later. For some I’ve done painted, make replacements as they request them, but some don’t want any changes so when they do become vacant I will have more work.
Back to where I was going. At some point the vacant units that come up will need an over-haul and it may be worth it to all the way with updates: bathroom, kitchen cabinets etc.
A client of mine had such an occurrence just recently at a property in the same neighborhood I own one which also made similar decisions. Before taking up a remodel he had asked another rental agent about possible rents. He got anwers at $550 and maybe $600.
I know that $750 is possible as well and maybe even $775.00 for a 1 bedroom in this area. When I embarked on such a remodel the second in this building, I decided to replace almost everything. I even moved some walls. Here is a post I did about the bathroom remodel and here are some photos of the rest of the interior and another one here with a photo of the demo work.
Before the unit was leased for $550.00. When it was finished I had several people ready to pay $750 per month. If you read those posts you’ll see that I kept my expenses down: the remodel was extensive, but frugal.
Now my clients place is also a one bedroom with three very important advantages, ones that are very desirable by potential tenants if taken advantage of. One: the unit has a private washer and dryer, Two: the unit has 1-2 covered parking spaces and Three: the unit has access to a private yard. Put these together and I would not be surprised if he was able to get $800 for it if he replaced put a sliding door to the back-yard with some gravel and a tree.
With a basic fix up his maximum potential rent is $625-$650 and $750-$800 for a more extensive remodel. Each is viable in this property. He can target two or more completely different tenant/client customers in the same property. Of course he could also spend only a few hundred bucks and rent it for $500.00.
Each of those choices needs to weighed against the investment, and the exit strategy, i.e. when will the propety be sold and the benefits of the remodel for the sale.