Rehabbing a Dumpy Apt Building

[CVentures1B12]

Hi all,

I searched around for a bit and didn't see anything of this nature, but if there is a previous post on this, feel free to direct me there and lock it up. Onwards...

I have found an REO apartment building that is fine the way it is, but could use some work. I am just looking for some input on the thoughts of undertaking such a project. I am thinking of kicking this to the curb because it would REALLY be a HUGE project. Especially since I have a full time job. It is 20 units and is 95% rented, but in a transitional part of town and I would like to put some money into them to make them a bit nicer. Anyways, to the point, what are some experiences with this type of rehab? Costs? Things to look for/look out for? To get it to the state that I would like, it would be a medium rehab (if we put it in terms of a SFH rehab). It is not necessary, but would definitely clean up the area.

Looking forward to it!

Best,
Josh

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[reipro]

Josh,

Just a couple of suggestions.

1) I have no idea what the rent and expenses are and what the cash flow looks like. If it is 95% full do not fix what is not broken. Again I have no idea what the cash flow looks like vs purchase price.

2) You never want to be the first guy to invest money in a redevolping hood. This guy will loose his shirt every time. You want to be in the middle to the begining. This way you can still get a good discount, but improvements will drive you appreciation.

3) Why kick it to the curb, find someone who can help you with the project if you really like it.

Just a coupld of thoughts:chatter:

 

[CVentures1B12]

You are right. Thanks for that. In response to your second comment, I would say that is exactly the phase that this place is in. It is about a ten block square and is definitely still transitional, but there is definitely some investor activity (multiple historic rehabs) and metro re-gentrification going on (street signs, sidewalks, etc.). I think it would be fun and doing the community a favor. Definitely more to look into.

Also, in terms of rents, etc. it holds its own. Should be putting in an LOI to the bank in the next few days, but if I can get it for 200K (that factoring in 200K of rehab work), then it is a steal. Still research to do, etc. but I'll update later!

Thanks again,
Josh

 

[1mancrew]

If you are set on upgrading, take them one at a time. when they are empty, do your upgrade, then upgrade the rent on those units to recover your cost. Be careful not to raise the rent to much or you will price yourself out of the market.

Make sure you have a plan and buget in place and stick to it.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[RealOG]

Check out my thread on Anatomy of a Commercial Deal, where I will be doing something very similar with a 16 unit building.

One thought, if it is 95% occupied, use the cashflows to improve the building. Maybe one unit per month (or as they turn over). At 95% occupancy, you will always have 1 unit empty. You can work on that unit, turn it, and then rerent it for the higher amount.

Be careful about your estimations on rent you can get. In these transitional areas, there is usually a ceiling for highest rent you will actually get regardless of the condition of the unit. There are things you wont be able to improve (like the tenant base of the building and the surrounding area).

Good luck!

 

[hatterasguy]

I hate "transitional" areas, or whatever the PC word is these days.

IMHO I like strong middle class to very high end stuff.


The transitional areas I can think of in my city have been transitional since my grandfather was growing up in the 20's and 30's.