Value-add renovations are a necessity. However, you're going to have to also figure out a plan where your tenants who are currently paying $900 a month now want to pay you $1,100. Furthermore, how can you ensure that your property is still a place where people want to live while these renovations are going on?
It may seem tricky, but there are ways to do it. Here is what you should consider before you start a new renovation project on your property.
1. Exterior Renovations
These renovations include new exterior paint, landscaping, shutters and more. It's a way to give your property replace any features that look outdated thereby enhancing the curb appeal of your property. You can also invest in updating common areas, such as hallways and entryways. You can make renovations to these areas without majorly disrupting your tenants.
2. Interior Renovations
Interior renovations are the most challenging type of renovations to do while you have tenants living on the property. However, they can be done with minimal disruption if you plan them carefully and ensure that you have the right team in place. Interior renovations generally involve the modernization of apartment units by adding updates such as new flooring, appliances, lighting, sink fixtures, and cabinets.
Here are a few options to make it work:
Do a gradual roll out. Unless the renovations are emergency repairs, there is no reason why you have to do them all at once. Instead, break up the renovation project into chunks and let your tenants know when each phase will take place. You can also offer incentives to tenants who may complain by offering the option to move out with a full refund of their security deposit or a discount on the last month's rent.
Offer tenants the option to upgrade. Once a unit has been renovated, offer tenants the option to move into one of them. Have your renters tour the newly renovated units to get them interested in paying the new higher rental rate at a slight discount over the price you might offer to a new tenant.
Give your tenants renovation options. In this scenario, you will allow your tenants to choose from a list of upgrades. Run this offer at the time that their lease is getting ready to end and let them know that in exchange for a small rent increase, you will upgrade their unit for them. For example, you could offer to change out their old appliances for new ones or install new flooring for just $50 more per month.
Unfortunately, there will always be some tenants that decide to move on rather than have to deal with the inconvenience of property renovations. However, by giving your tenants a voice in the matter, you can greatly increase the odds that your renovations will go smoothly with fewer objections from your tenants.