With multifamily being one of the hottest sectors in commercial real estate right now, it is easy to see why investors are jumping at the chances to scoop up properties. Many investors, including FCA, are looking for value add properties. Why? Usually properties that are not the prettiest, have management issues, or are under rented can have a strong return on investment. With new, beautifully constructed properties popping up everywhere, apartments that are 15-20 years old can be updated to compete with new developments at a lower cost than building new. So, what are some ways to add value to older apartments?
1) Curb Appeal – updating the exterior of buildings by something as simple as a paint job can dramatically change the overall impression of a place. Also, either by adding landscaping or cleaning up the existing landscape can up the value of a property, especially if you choose plants that need less maintenance (which then lowers landscaping costs).
2) Cosmetic Repairs – Lets face it. People are not attracted to an outdated kitchen or bathroom. Tenants want nicer, newer things, but not always pay a premium for it. So, some simple fixes include: repainting or staining existing cabinets, adding hardware, changing out the counter tops or resurfacing them, and switching out aged appliances. Other cosmetic fixes can be ripping up carpet and installing a faux wood floor throughout, freshening up the interior paint, and installing two inch wood blinds. All of this can be done at a reasonable cost and will have a positive return.
3) Laundry Units – This can be trickier to add, but worth the cost in the end. Finding space for a stackable is ideal to have in every unit, but if there is no way, trying to add units within each building is another alternative. Or the other option is to update the existing laundry facilities with newer appliances.
4) Property Management – Changing out property management companies is a great value add tool. If the management team is not marketing the complex correctly, interacting with tenants, or following up on tenant issues, they can be a part of the reason why the property is not doing as well as it could be. If you put in a company that you trust and have worked with before, it can really change the dynamic of the apartment complex.
5) Increasing Rent – Knowing your sub-market is key in order for this to work. Typically though, older apartments buildings are managed by owners who prefer to retain tenants over anything else; sometimes even if that means keeping the rent below the current market. This day of age, renters are more concerned with amenities and location over the price of rent.
Each multifamily property is unique, but these are just a few of the numerous ways you can add value to an older property. FCA’s focus is investing in value add, multifamily properties across the United States. We employ a detailed, genuine hands-on and opportunistic approach to determining and realizing these respective values. For more information, please contact us at 630-765-8432.