Many apartment complex owners today are trying to improve their rental properties by renovating units, transforming common spaces, and adding new, desirable amenities. These improvements often allow property owners and landlords to charge higher rents, but that shouldn’t be the only motivation to renovate. In this article, we will discuss how to be smart about renovating an apartment complex.
Why Renovate in the First Place?
The most obvious answer is to increase rents and bring in more income. While this is likely to be the area in which you see the biggest ROI boost, this is not the only reason that you should renovate an apartment complex. For starters, renovation projects can be more than just cosmetic. You can make upgrades that actually improve the condition of the property and make it more viable in the long-term. Upgrades you make now could save thousands or more in repairs down the line.
Upgrades you make now could save thousands or more in repairs down the line.”
Renovating an apartment complex will also reduce your risk of vacancy. If your apartment complex is considered desirable in the market you’re in, it will fill up faster than that old, grungy complex that hasn’t been updated in a long time. You can generate buzz by marketing your new updates and enticing amenities, potentially reducing the risk of having apartments left unfilled. The apartments that you do fill will likely remain occupied for longer, as tenants are more likely to want to stick around. This ultimately means more income and less risk for you.
Finally, when renovating there are opportunities to generate additional income streams. For example, if you provide good laundry facilities, you may earn a decent amount of money from the machines. If you have a nice pool, maybe you’ll charge an additional fee. All these smaller ways of generating income from residents just increase your net operating income.
Key Areas of Improvement
There are so many parts of an apartment complex that can be renovated or upgraded. There are some key areas where making some changes, big or small, can make a huge difference.
The outdoor common space
Many apartment renters are foregoing their own private outdoor space in order to live in an apartment building. If you can offer some common outdoor space that they can enjoy, they will likely be satisfied. You may already have some outdoor space available, but there is a good chance you can make it even more enjoyable. Consider redesigning or upgrading your outdoor space by adding stamped concrete, landscaping, seating, a barbecue area, and maybe even a pool. This space will create a sense of community and will be a great perk to mention in marketing.
As an apartment complex owner, your job is to (literally) keep a good roof over your tenants heads. All roofs need repair from time to time. Getting new roofs can be a massive expense, but it’s a solid way to protect your investment long-term. Make sure the roofs are cleaned and maintained regularly, prolonging the life of your roof. If you find that you need to replace it altogether, consult a professional who has specific experience in commercial roof replacement. When shopping around, try to find a roofing system that comes with a warranty that you can transfer to the new owner if you end up selling the property--that could be a major plus.
Laundry is an amenity that will almost always be asked about by potential renters. It’s an easy way to impress them! Make sure the space is friendly and clean, so tenants will actually use the space. Provide plenty of appliances that are up-to-date and running well.
People will pay a premium for safety. Make sure that the apartment is well-secured, with technology needed to ensure security both for the outer main property entrance and each individual tenant’s door, if there are interior hallways. Consider investing in video surveillance in the common areas and entryways.
Enhancing flooring can make a huge difference in the overall look and feel of an apartment. When selecting flooring, consider factors like cost, durability, and appearance. Whatever flooring you choose should be long-lasting, visually appealing, and affordable. A popular option is vinyl plank flooring, which mimics the appearance of hardwood, but is cheaper and easier to install and maintain. It also does a better job of soundproofing, which is important to renters.
The Importance of Marketing Your Complex
While all of these physical changes you make to an apartment complex can be beneficial, they are only half of the equation. There’s a good chance the apartment brand and reputation also need a little freshening up. Renters differentiate apartments by price, location, amenities, and overall appeal. If yours is one of many apartment complexes with the same price and the same location, how will your building stand out? A story or a brand makes it that much easier to attract high-quality tenants. Think long-term: someone might not rent with you now, but after a hefty raise or the end of a lease, you want to be the first name on their list.
Undergoing a physical renovation is a great opportunity to rebrand the complex as a whole. Come up with a name for the apartment complex and develop a story that is meaningful, even a nod to the neighborhood or overall region you are in. Then you can begin to market all of the amazing amenities you offer as part of that brand value, which will lead to more recognition, and an increased likelihood that people will pay a premium to live in your complex over others.
Apartment Complexes and the “Wow” Factor
Ultimately, there is no single formula for renovating an apartment complex that will undoubtedly boost your earnings. You need to be knowledgeable about all of the different options, while also having your finger on the pulse of what people in your area are looking for right now. What is that thing that will generate buzz and create that “wow” factor? It could be the fastest wi-fi, or a built-in dog park, or in-unit washers and dryers. It varies widely from market to market and is ultimately up to you to figure out. Once you have a good understanding of what your target market values, you will be able to make upgrades, creating a brand and story that draws people in and makes the renovation costs worthwhile.