Value-add multifamily properties are a huge area of opportunity for landlords as, for a minimal investment, they own a building that starts offering a return almost immediately. Of course, the reason these properties are such bargains is that they were under-managed in the past. That makes it difficult to demand higher rents from tenants without justification. To do that, landlords need to consider what multifamily value-add ideas will offer the highest return.
Whether an apartment is a brand-new purchase or a long-term portfolio property, it’s important to always consider how it can be improved. Landlords should strive to positively impact their tenant’s lives, elevate existing amenities and revitalize entire communities through their investments. This builds value into a property that will offer sustainable revenue growth for years to come.
Three Multifamily Value-Add Ideas in High, Medium, and Low Price Ranges
There is a wide range of multifamily value add ideas for landlords to consider, running the gamut from relatively inexpensive to massive investments. Regardless of the price tag of the update, it should always positively impact the tenant, elevate the area and help tenants connect. These three goals ensure real, long term value from any project.
Landlords should strive to positively impact their tenant’s lives, elevate existing amenities and revitalize entire communities through their investments.
#1: Elevate existing areas with accessory upgrades
Elevating an existing area is much more cost-effective than building something from scratch. One of the most common spots for improvement is the community swimming pool. Just about every multifamily complex in California has one, so landlords must choose ways to make theirs stand out. Adding new features to a pool can elevate the space with minimal investment and immediate results.
- Low: Pool slides. A commercial pool slide can be purchased for under $2,000 and installed in a single day. This adds a fun element for kids while also making the overall area more sophisticated.
- Medium: Underwater speakers/color changing lights. If the fixtures are already in place, it’s possible to simply change the pool’s light bulbs into a type that rotates through a range of colors. In addition, underwater speakers can pipe in music. Costs can fluctuate widely, but high-quality underwater speakers can cost about $1,500 each.
- High: Islands and grottoes. With a large enough pool, it could be possible to add islands and grottos that turn it into a resort-style oasis. Of course, these kinds of structural changes will be very expensive—typically in the high five-figure to low six-figure range.
#2: Impact people’s lives with amenities for convenience
Walkability is a big demand for today’s renters. Eighty-eight percent of millennials, the largest renting generation, choose to live in metro areas where they can be in the center of everything. That’s why offering amenities that allow millennials to do more at home is such a great return on your investment. Three to consider include:
- Low: Dog parks. Adding a dog park does not have to be an expensive endeavor. In some cases, it’s just about finding the space and adding a fence. Of course, more complex parks with dog toys and activity structures are also an option.
- Medium: Business centers. Business centers with computers, fax machines, printers, and other necessary amenities are an excellent option for catering to tenants with telework arrangements. Of course, providing all these devices, as well as the software, Wi-Fi, and the supplies and other utilities needed are ongoing expenses that can make this a costly option.
- High: Coffee shops. If successful, a coffee shop on the grounds can act as a new source of revenue. However, opening one will likely be a six-figure investment due to the need to retrofit an entire space for serving food and beverages.
#3: Revitalize the community with events
Today’s renters seek a sense of community to connect them to the people in their area. Apartment renters, however, move every two years on average, creating a high-turnover scenario where it can be difficult to forge new relationships. Using apartment community areas to stage events is a great way to connect residents, old and new.
- Low: Weekend pool parties. Pool parties are an easy option for getting neighbors together, as the main cost is the supplying of chairs, tables, food, and drinks. To make the area constantly party-ready, landlords can consider installing permanent grills and providing a seating area.
- Medium: Courtyard movie nights. Most landlords are surprised by how low-cost it is to have a movie night in an apartment’s courtyard. All that’s really necessary is a sheet to act as a screen and the projector, which can be purchased for a few hundred dollars. Sound system prices will vary based on the area to be covered.
- High: Clubhouse happy hours. A clubhouse is an expensive investment, but it can also be a great place for residents to mingle at the end of a workday. This is an especially useful investment for attracting millennial renters, who prefer to do their drinking at home.
Whether an apartment is a brand-new purchase or a long-term portfolio property, it’s important to always consider how it can be improved.
Deciding Where to Invest Renovation Funds
When choosing which multifamily value-add ideas to invest in, it’s important to consider the community demographics and the area. For example, a business center in a complex in downtown Los Angeles wouldn’t do as well as a dog park or pet run, as there are many co-working spaces available to renters already but not as many places to walk their pets.
Speaking to a California contractor with a specific understanding of the rental market will be crucial. They will be able to advise you as to which upgrades are popular with tenants in the area, as well as what options you could do without. A good California contractor can offer you a range of ways to impact, elevate, and revitalize a community.