One of the well known roles that we have as a Property Management Company is upgrading apartments and determining market rents for them. Sure, It’s not exactly rocket science and anyone with a phone can go on a site like zillow and see what the property across the street rented for last week. But the benefit of having a professional Property Manager on your team is discovering untapped potential value in a property almost to a T.
This property here that we manage in North Newark was in need of some TLC when the owner brought us on for management in January of 2021. The 2nd floor was occupied but the first was sitting vacant a few months after the last tenant left. The previous first floor tenant had been in place before the owner acquired the property about 4 years prior and by the looks of the pictures as you can see here, who knows how much longer before that. The walls, windows, and just about everything else in sight were covered with a yellow film from the heavy cigarette smoke.
The challenge that this owner faced prior to hiring us was that they didn’t have a huge budget to completely remodel this apartment. Luckily for them, our team was able to look past the current state of the property and see a vision that wouldn’t cost a fortune to carry out.
After measuring up and sharing our vision with our vendors and maintenance team we were able to get our client a quote within their budget to bring this apartment back to life.
For a total of $7,500 we were able to completely turn this apartment around. We were able to change out the old carpet for new hardwood floors, replace the bedroom doors, change out the light fixtures, replace 2 windows, hardwood floors, paint the entire apartment, add a new toilet and bathroom vanity, and have the place professionally cleaned.
Once the upgrades were completed, we were able to rent this apartment for $300 more than the previous tenant was paying. Or $3,600 more per year. Compared with the total amount needed to achieve that increase in rent ($7,500), that equaled out to a 48% Return on the capital invested by our client.
Before hiring Capital Street Management to manage this property, the owner had considered selling this property. After being told that the renovations needed to get it rented out again would require a complete gut job to this apartment who could blame them for wanting to sell. After speaking with our team and hearing our vision for the property they decided to hold on to this property after all.
The hidden value in this situation wasn’t the return that we were able to get or the owner no longer wanting to sell the property but it’s that we were able to not over renovate this apartment. We could’ve easily opted to re do the bathroom and kitchen and spend closer to $20k but the property wouldn’t have necessarily rented for that much higher in rent due to constraints of mainly the market that it’s in. With the light renovation we were able to efficiently get this owner the most bang for their buck.
If you’re a landlord with property local to Essex/Union County or a surrounding area here in NJ and you’re facing similar issues with the condition of your property and you’d like another option outside of selling your property, schedule a call with our team, you can reach us by phone or on our website, we’d be happy to assist you.
