As a landlord your responsibilities can become burdensome at a moment’s notice. At the 1st sign of any inconvenience that your tenants experience, you can usually expect to hear about it, and you know what that’s fair. But with this great responsibility there SHOULD come a great reward. Right? With being weighed down from the issues at a troubled property you could easily forget to go after your reward, which is usually a pay day. In March of 2021 the owner of this multi-family in Bloomfield, NJ hired us to manage this and 2 other nearby properties for them. At the time, the 1st and 3rd floors of this property were occupied with paying tenants and the 2nd floor was vacant…. and completely outdated.
Living out of state, this owners biggest concern was having us take care of the recurring issues that he was facing at one of the other 2 properties nearby. Getting this 2nd floor apartment rented was not a top priority. Prior to the last tenants moving out about a year prior, they were paying $1700/month in rent. Now As the owner explained, the loss of this monthly income for the time being wasn’t that much of a pain point because with the other 2 tenants in place, the property was maintaining itself.
After a few weeks under management and a few needed repairs our team was able to stabilize the nearby troubled property. And then, we focused our sites on this vacant 2nd floor apartment. Upon walking through it we quickly noticed that this apartment had a lot of potential. Sure it was completely outdated but the space and features were great. It had a brick fireplace, 3 bedrooms, a large eat in kitchen, a separate living room, dining room, AND a sun room. On top of that, the owner had the bathroom remodeled right after the last tenants moved out the year before. As far as getting this apartment rent ready, Our work was cut out for us.
Upon running comps for market rents and getting quotes for the work needed to be done, our team discovered 2 things. For 1, this property entirely, all 3 floors, had been rented for under market rents, even with the condition it was in. and 2 the space in this 2nd floor 3 bedroom apartment was far more than other 3 bedroom apartments nearby. This left us with the decision to consider turning the sun room into a 4th bedroom. After weighing the costs and potential rent value, we executed on our vision and brought this 4 bedroom apartment to life.
For a total of about $30,000 and a few months of work we: completely turned this apartment around and got it ready for the rental market in time for the summer rush.
As you can imagine, this property practically rented itself, we made sure it was professionally cleaned, took some great photos and filmed the virtual tour. Within 2 weeks we were able to pick from a strong pool of applicants and get this property rented for our asking rent of $2,600.
At $2,600/month, we were able to increase this property’s income by $900 compared to what it had rented for prior to the upgrades. Considering the total amount spent of $30,000, the $900 increase is going to yield this owner a 36% Cash on Cash return on the capital needed to upgrade this apartment. In a market like the one we’re in today, there’s not many places you can buy a property and receive a 36% return on your capital right out of the gate. Our team here at Capital Street Management was able to achieve this for our client at a property that they weren’t giving much attention to. The best part about the story of this property is that it’s still being written. There’s even more income to be had with a few more upgrades to the other apartments and the opportunity to charge for amenities such as off street parking and designated storage space in the basement for each apartment.
In all, This property which was once an afterthought for this owner has become a Cashflowing pillar in their rental property portfolio with even more upside and opportunity for growth.
If you’re a landlord with a property local to Bloomfield NJ or any surrounding area here in NJ and you’re interested in figuring out if you’re leaving any cash on the table from untapped value, go ahead and schedule a call with our team. We’ll discuss a plan, and figure out if it makes sense to work together. I’m Albert with Capital Street Management, thanks for reading this video.
