iness centers generally subsidize at-home businesses to the detriment of the larger community, unless they provide unique professional benefits such as study groups for the bar exam, a medical library, or police, fire and teaching certification resources.Interiors. Here’s where most of the money is made (and where everybody loves to take pictures). The very first thing to determine is whether there are in-unit washer dryer hookups in the apartment homes. With hookups, you can turn the property into a Grade B+. Without it, you probably can’t—unless you’re in a high–end urban area where you can substitute a laundry service for washer/dryers and a small combination unit in the kitchen. I have done this successfully, but in a very limited way. From research we performed using a method called conjoint analysis (what hotels use to design new hotel concepts), we know that in-unit washer/dryers have a huge impact on price and demand. Installing water lines for in-unit washer/dryers can cost up to $12,000 per unit and may be justified if very little other exterior work is required.The rest of the suggested interior upgrades are rather well known, and they come in different product lines aligned with your target price point. Kitchen and bathroom cabinets, countertops, fixtures, appliances and lighting are available today in packages specifically tailored to value-added redevelopment. Check out National Cabinet Companyand Dogwood Building Supply for container-load prices.For flooring, avoid carpet in the main traffic areas, and limit it to bedrooms. Kardean, among other manufacturers, makes a great durable hardwood floor-looking plank laminate that wears well and looks great, as long as your sub floor is level. Pay particular attention to interior doors and door hardware (it should look modern) as well as the thermostat, bathroom fan, bathroom mirror and bath enclosure. Your objective is to remove any visible reminder of the age of the apartment. Also, focus on the use of interior wall color paint to create depth and dimension, and to create warmth. Your model should be consistent with the customer segment and should provide opportunities for the new resident to customize (paint color) or purchase (furniture) the look you have on display.How much can you afford to spend? Normally, you should expect to spend no more than $8,000-$12,000 per unit for all of your improvements to achieve a 15 percent rent increase, assuming you are buying the property at a market level cap rate. Of course, higher rental increases will increase your budget, and a higher average rent market (i.e. Washington D.C., Seattle, LA ) will also give you more room in your renovation budget.(Jeff Adler is president of The Sanctuary Group LLC based in Englewood, Colo. and is former Chief Property Operations Officer of AIMCO.)
Can Your Class C Property Become a B+?
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