What do you guys typically think of with respect to per door renovation estimates (interiors) on multifamily properties? Ie, what do you really get for your money in the following tiers? Obviously this varies market to market based on labor and material costs, but you get the idea:
$10K/door: get you XX (paint, carpet, light fixtures and some plumbing fixtures maybe?0
$20K/door: above plus counters and cabinets, plank vinyl flooring
$30K/door: above plus SS appliances
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10k a door should get you all of the above
What market are you in?
I'd generally agree, but also with the caveat that 10k wouldn't cover the labor and contingency. For all of the above, you're looking at ~$12k-$15k depending on MSA.
thanks. socal market. surprised at the 12-15K estimate, I would have guessed $20-25K.
Ah, you'll be significantly higher there, but often times the premiums and scope of work being done in some Califronia assets is much greater than that of the Sunbelt. What age range are you looking at?
I put some anecdotal examples below which will hopefully :
Hope that helps some.
20-25k = complete gut and remodel w luxury finishes
thanks guys--very helpful
Ricky Rosay - is this a personal project or through your shop? Either way, how do you go about sourcing your GC and Labor?
Both...for shop, looking to back-check our internal construction estimates because I think they are far too conservative. We either self perform (usually for wood frame garden product) or do a third party GMP with invitations to bid based on a GC and fee proposal. For personal, looking to start syndicating deals on my own after locating an larger equity partner. I think you are as well....shoot me a message..
20-25k = complete gut with higher end finishes. Phx/socal market
All - What is the standard ROI one targets for an interior unit, value-add project?
In previous work with a REPE firm behind one of the largest value-add MF operators in the nation, I believe they were targeting about 15%-20%. It's been a few years so I'd be interested in hearing where people are at now.
we are way lower, closer to 8-10%
How do the per-door estimates above scale? Does it matter if it's a 5-unit MF building vs. 100-unit apartment complex? Maybe a certain percentage factor for any additional units over X?
I am a real estate Principal. I just bought three condos in a NY suburb (rockland county) and did the following renovations. I have found that the following renovations yield the biggest impact (and returns via higher rent).
1) change all doors and moldings and closet hardware and get a really good painter (who knows how to make old walls look new) 4k to 6k
2) install new floor (tile over old tile or laminate) 3 to 5k depending on size of unit (mine are 875 sqft)
3) Change the kitchen cabinets and counter tops and tile back splash 12k (depending on size of kitchen, includes white middle market wooden cabinets, Formica counters that look like stone and SS appliances, nice handles, new light fixtures, microwave over range)...if you want real stone counters add 2k to 3k
4) gut out the bathroom and start over 8k (spend time picking nice tiles around the shower and floor as that makes the room "pop", standing shower and off the shelf CLEAR glass shower doors, also consider adding a nice niche on the wall opposite the shower head).
30k you have a premium apartment with rental upside of ~6k per year plus cuts your maintenance costs in half for the first 5 years.
If you have a higher end clientele and add more premium features, add 10K to cost and add 3k to upside, if you are in a lesser market you can get away with 20k using budget materials and still get 3 to 4k upside.
probably TMI...but the cost of materials are way up since 2021.
Now if you are doing 30+ doors at the same time you can bring the cost down at least 30% on the labor costs and 20% on materials. Just make sure you require your general contractor to use experts in each are of the job (floor guy for floors, tile guy for tiles, kitchen guy for kitchens, carpenter for wood work, and paint guy for paint, licensed plumber for plumbing, etc ) sounds obvious right?... but quite often to cut corners GCs may use generalists to do one or more of these specialties and you'll pay for later in the form of higher maintenance costs down the line.
Whatever your broker says, make it 2X!! or bring a construction guy or girl with you. You can put what ever renovation budget you want in the model if you are juicing up returns but it will cost you more to actually renovate the asset! Also, surprises come up which are no fun. Renovation and rent push comes down to the level of rent you are trying to achieve, always a balance between proforma returns, trying to make the model work to buy a building, etc.
$10K / DOOR has been the same BS number for the past 10 years for deep value add or regular value add. More goes into it, do your homework so you aren't lying to yourself to make the returns work. The world of 5 to 10 percent rent growth is over with cap rate compression with added bonus of low interest rates.
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