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When looking for a property to invest in, the goal is often the same - find an underperforming property and renovate it to bring it back to life. Successfully renovating a multifamily apartment property successfully takes good planning and flexibility. The main goal is to maximize the rent dollars the property will eventually bring in. Here are the five must-know steps when renovating:
Step 1: Do an in-depth market study on rental properties in the area
Before you decide to buy and invest in a property, it is critical to do an in-depth market study of the property's area. You need to understand where the property you are looking at is compared to its peers.
Ask yourself the following questions - Will it be profitable? Is my desired rent feasible in the area? If you don’t do this first step, you’ll run into problems in the future.
Use a combination of sources to do this. You can use Google maps to look at nearby apartments, usually a 2-3 mile radius. Look for average rental prices in the area. Then drive around and physically look at the neighborhood. Try to find out the area's median income so you understand how much room you have to make your property affordable.
Step 2: Look at your budget
Now you know how much you can charge for rent. Based on this, make a renovation plan to see how much you can spend on the property. The budget needs to make sense. It has to be enough to cover everything essential, but not too big that it won’t be worth it.
Step 3: Wait 30-90 days before you start renovation
This is very important. Some investors won’t want to wait, but this is an essential step. When you wait, you’ll learn a lot more about the property that only time will uncover. For example, leaks in the roof might only come out when it rains. You might also realize you can lower your renovation budget after visiting the property several times. Constantly look at the plan before starting, and you’ll have more confidence in your investment.
Step 4: Use an outside-in approach
“You had me at hello.” This line is a good reminder of this step. Prospects need to be attracted and emotionally attached to the outside first. This will make them want to go inside. This will mean improving amenities for apartment properties, such as the fitness center, pool, or a dog park. Renters need to imagine how they will spend their time outside. After this, the interiors don’t need to be extraordinary, as long as they are not disappointing.
Step 5: Constantly re-assess the plan
Some people hesitate to do this because they are worried that investors might think they don’t know what they’re doing. However, if it makes sense to change the plan, go ahead and change it. The budget and major components shouldn’t change, but other aspects can change to get more rent. When you re-asses, you might discover that you are over improving, which doesn’t lead to higher rent. Re-assessing the plan makes sure you get the most out of your investment.
Do you need help managing a rental property? Learn more about rental news, managing rental properties, and find helpful advice on maintaining your rental investments on the Illume Property Partners website. Contact us today.
Source: Real Estate Investing Today