Unique Multi-Family Value-Add
Hi guys,
What are some unique value-add strategies you've implemented in your multi-family assets? I am talking beyond the typical lipstick on a pig upgrades. Some things I've experimented with lately are minor technology upgrades such as Nest thermostats, built-in wall USB plugs, and digital locks. Typical cost of an upgrade like this is $500 and will get a $30/month premium (72% YOC).
Also interested in hearing about any unique common-area value-add people are doing.
A few unique things I have noticed:
Nest isn't exactly a minor upgrade, but USB outlets are pretty standard in new construction so that's a good one. Digital locks have given me more issues than they're worth, so if you have a good company let me know.
Package concierge is huge. Not sure if you really get a premium for it but it makes the leasing staff happy.
Honestly though, upgrading kitchens and baths is the standard because it works and people care about them.
People still care way more about in-unit washers/dryers and dishwashers than a lot of the other "cool" upgrades being built into new product. A certain cohort of tenants won't bat an eye at paying an additional $200/month in rent for an in-unit washer and dryer.
Something that worked well for us on a recent acquisition was installing under-sink dishwashers for 1 bedroom and studio units where kitchen space was at a premium. These are about half the size of a normal dishwasher but hold ~75% of a full-size unit.
I've done 18" dishwashers, but those are expensive. Is this what you're talking about?
It's also nearly impossible to get a nice looking 30" range and impossible impossible to get a "matching" builtin microwave.
Agreed. From personal experience, my company offered me a deeply discounted unit in a nice (A-) location and I politely declined because it had no W/D. I was like, "There's no way in f*ck I'm driving to a location to hang out in for several hours to do my laundry."
Agree with the packaged washer dryers. A few more that I think are differentiators: --mini undercounter wine fridges --sonos built in speakers (maybe on premium units only if you're on a tight budget) --second the schlage digital locks, love not having to take keys with me when leaving the house and not driving --adjustable closet shelving/rack system that lets the tenant customize their closet as opposed to being stuck with a fixed rod --showerhead wireless blue tooth speaker insert for an incredible wake up
What are the costs for each, incl instal labor?
Also, are you responsible for replacing/repairing the blue-tooth speaker if it goes out/malfunctions?
I think Nest systems and digital locks are great ideas. USB plug in technology is changing as we speak so I would say install them in a way that retrofitting new inputs won't be a hassle. Nest systems also really improve energy efficiency, so I wonder if that kind of upgrade would make a property eligible for green program financing. Rainfall shower heads I would imagine would be attractive.
Common area amenities I think that get overlooked for apartments but are staples in new student housing developments are game rooms. I have a client that builds game rooms on his conventional deals and the tenants love them. They typically have a bar area, pool table, juke box, pinball machine, stuff like that. In one of them, he built a separate small stadium sized movie theater that sits roughly 15-20 people with a projector screen. Tenants use it like crazy.
What about inhouse daycare? I think that could be a huge one. I assume maybe liability stuff with being responsibility for young kids but that could be an attraction considering the ridiculous prices of daycares nowadays.
I have been seeing this more in urban developments.
One our large properties has on-site daycare, but we lease space to a third party to take on the liability and operations, so it's not a free service. But it's definitely convenient for the tenants.
What you need to keep in mind is what class of multifamily your investing(A,B or C class), and based on that your tenants will have varying demand for the upgrades you are talking about.
Also, from my experience, there are simple things people miss out on e.g. water saving shower heads, green initiative interest rate discounts etc. Unlike other upgrades like fences etc., another advantage of the examples I just mentioned is that you don't have to bet on tenants valuing your upgrades and being able to charge higher rentals.
low flow toilets, water saving shower heads, etc definitely pay for themselves with the green pricing you can get on agency debt. However they do not affect your terminal value, which is what I think OP is getting at.
Guys, please stop using low flow toilets and low flow shower heads. There was a whole Seinfeld episode about this in the 90s. People just flush more times and stay in the shower longer to get the soap off.
Maybe if you are taking a huge shit...but it saves a lot of pisswater.
Tell that to the agencies! (actually don't)
Can confirm. Our suppliers say the same thing.
Second this--the quality of ones showering experience is noticeable and unless you are trying to score LEED points (or are going all out on sustainability / required by code) it only can hurt. Water is passed through to the tenant anyhow.
Not in NYC area
Totally with you. Low flow anything is terrible as a user. I literally test the shower before I rent any apartment. If the water is coming out weaker than piss out of an old guys dick, I'm out.
how much cost saving are you getting on low flow fixtures? showers and toilets... I've looked at this, and even with 'green financing' it does not appear to increase value, just costs more up front. Can someone walk through this?
When we underwrite opportunities where low flow systems can be implemented, we typically reduce the pro forma water bill by up to 20%.
are you using water flow meters? How do you get the 20%
Touch-powered faucets, a free Echo with the compatible light-bulbs, etc
Common area upgrades such as LED lighting and converting landscaping into Xeriscape can help save on utility expenses. This will also help with acquiring "green initiative" financing and attracting impact investors.
Adipisci laboriosam neque et. Sit natus cupiditate perferendis nihil itaque. Non quo quasi sint ea.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...
Ut ut aspernatur nihil voluptas qui. Aut assumenda quam accusantium qui.
Nostrum architecto voluptatem quaerat maiores alias. Aut quam voluptatem numquam quis eum enim nisi.
Veritatis necessitatibus nobis quae asperiores. Error inventore rerum dolores et eum. Culpa suscipit nemo aut. Optio aspernatur consequatur corrupti quasi aut ut.