When you are looking at buying a multifamily property in the greater Seattle region, keep in mind the current valuation, based generally on the annual rent tally in relationship to price (the CAP rate), is not fixed in stone. With strategic long-term value-add improvements, property investments earn money flipping or holding long term. Older existing multifamily apartments may seem drab and dreary compared to new ultra-modern buildings, but HeatonDainard Commercial puts a comprehensive plan in place that builds value in myriad ways to raise the value of each investment.
With the right modifications and an eye for the market, and an experienced team behind you, you can transform a run down property into an investment worthy to flip or keep. All it takes is a few well-directed additions, one of the major strengths of Heaton Dainard Commercial. Here are some of the ways to boost investments in existing multifamily properties.
Upgrade the property to a smart home
The world is moving too fast to be stuck in the age of analog readings and manual gadgets. Renters desire homes that can be controlled via Alexa or a few clicks of their phone’s button. While a lot of smart technology is expensive, a few options are quite affordable.
The following are some high demand but affordable technologies which you can incorporate into your property to raise its value:
- Keyless smart locks allow residents to open doors right on their mobile phones even when they are away from home. This may come in handy while welcoming families, friends, or even a delivery agent when they are out of town.
- A smart energy-saving thermostat will go a long way to help residents cut down utility bills.
- Smart home hubs enable the resident to organize and control other smart devices using their phones.
- Smart ergonomic plugs save energy and space.
- Smart lighting can be controlled from the phone and preset to dim and brighten up according to the renter’s schedule.
- Air purifiers and smart air conditioners are an excellent option for those with asthma or allergies, especially in populated cities where air pollution is a significant problem.
All these smart gadgets can be controlled remotely at home using a smartphone. Smart homes attract the high caliber renter who may be accepted at multiple property rentals. This can emerge as a determining factor when a tenant who is highly desirable needs to choose between opportunities.
Spruce up the interior to add multifamily property investment value
Dingy three-room apartments with cramped kitchens, outdated appliances, and stuffy living rooms are perfect for the savvy commercial investor to purchase. When multifamily properties for sale feature below average appliances, below average doors, below average condition of paint, and so forth, they command below average rents. This is what HeatonDainard Commercial views as an investment opportunity. Because once the interior is updated, the annual income from the multifamily investment will go up. Once the annual income is up, the building has equity over the purchase price. It’s a great recipe for successful investing.
A striking interior design and new appliances will be rewarded with market rents. HeatonDainard Commercial also looks beyond the basic kitchen and bath upgrade. If a wall can be removed or a bedroom installed for a better and higher value option, this is going to be job one.
When at some point selling makes sense, the investor can sell the multifamily apartment complex for a profit. The outward appearance of a property is essential, but many renters are even more concerned about the suitability of the interior design. HeatonDainard Commercial provides investments with a design overhaul, looking for upgrades to bedrooms, baths and kitchens, in particular. If a two-bedroom, two-bath apartment can be turned into a three-bedroom, two-bath apartment, that’s a great value to add. When possible, put individual washer and dryer hookups inside the unit.
Other modern features like dishwashers, new kitchen appliances, air conditioning, strategically placed outlets, high-speed Wi-Fi, and a reliable cellular reception are becoming more critical every day to the current renter.
Focus on the curb appeal when you’re getting ready to sell a multifamily investment property in Seattle
Buyers tend to subconsciously make sense of the environment and other features around a property before they start going through their mental checklist. When you are getting a property ready to sell, you’ll get a much better price with new paint and clean landscaping. First impressions count.
Photographs are sometimes the new walk-through for marketing investment properties
Homes including multifamily investments, are nearly always featured for sale with photographs. The better the photographs, the more buyers a home will command. The more buyers a multifamily investment property commands, the higher the price it will garner. Even small upgrades to the exterior will result in a better “show” online, where most of the marketing happens for investment properties.
You can try the following simple but effective techniques to improve the curb appeal of your multifamily property:
- Install warm lighting to help the neighborhood appear friendly during the day and at night.
- Pay attention to landscaping. Any shred of green should be well-tended and kept neat. Plant some flowers and trees, or cultivate a garden. A general garden breeds healthy interaction among community residents. In a case where there is no landscape, potted plants can serve as a brilliant solution.
- Touch up the building paint, wall coverings, and other fixtures. Fix up fences, signs, and drainage.
- In terms of square footage, the largest part of the building is the parking lot, so you have to invest in keeping it clear of potholes and occasionally repaint the lines.
Consider creation of common workspace areas
Many multifamily property investors believe that common workspace areas are part of the loss factor of a building (a place that cannot be rented out and whose maintenance is covered by other rentable property).
Investing in workspace areas is another way to boost the value of a property. Many people work from home these days and need a dedicated workspace within, nearby, or outside of their private apartment.
Working from home is the new reality. With advances in telecommunication, reliable courier services, and universal internet access, working from home is at an all-time high. Post COVID these numbers have intensified, and although the future is not yet known, the home office “stock” just went up. Statistics from the CBRE Group says that 69% of millennials are willing to give up substantial employment benefits for a more flexible working condition.
Therefore, creating an enabling work environment is a possible value-addl for attracting tenants who work remotely. If there is no available space, think of making some with flexible walls and ergonomic architecture. Invest in good lighting and ventilation apparatus, and other workplace essentials like strategic outlets and desk space.
Increasing the quality and number of outlets isn’t just for workspaces, either. Even children now require lots of outlets for their electronics. Older apartment units were not built with this era in mind. When possible, bring in an electrician and increase outlets to apartment units. If the owner doesn’t do this safely, tenants are bound to put lots of extenders into outlets that weren’t built for that many plugs. If you set things up safely, you can win the long game.
Invest in sustainability practices to add value to your investments
A lot of people are more environmentally conscious than they used to be, particularly in the Pacific Northwest. Property owners are making adjustments towards making their buildings more environmentally and eco-friendly. This can be a win-win-win for the person selling, the person buying, and the tenant occupying.
Potential renters of multifamily properties are now looking out for things like:
- Power-saving light bulbs and appliances
- Sustainable cellulose insulation
- Thermal backed curtains
- Efficient water fixtures
- Dual-flush toilets
- Smart meters
- Eco-friendly paint
These are not only environmentally friendly options. They are also economically friendly because they cut down on the money spent on electricity and heating. Tenants will be glad to shave a few dollars off their utility bills every month. The sustainability factor is a great marketing tool, plus it’s good for the planet.
Add extra amenities that tenants love to add multifamily property investment value
Something as seemingly trivial as having a rooftop grill can be a great value-add magnet. Think of things that make life easier for your tenants. Invest in valet trash, dry cleaning lockers, high-speed Wi-Fi, and creative options that don’t cost too much but bring added value.
Pay attention to coworking spaces, fitness spaces, sporting facilities and rooftop decks. These amenities used to be luxuries, but the bar is always being raised higher in multifamily property investments.
Investment in a multifamily property requires a comprehensive plan. HeatonDainard looks for value-add optimizations to every multifamily investment. Consider the value of upgrading a property. For investors, the immediate feedback comes in the form of the rental rate the property can command. This becomes a higher capitalization rate. Quality value-add options attract higher caliber renters. Be flexible and keep an eye on what potential tenants are looking for when renting multifamily housing. The right changes go a long way in raising your property value in terms of market appreciation and rental income. The solution is to find the right mix that will attract tenants and still give you a sizable return on your investment dollar. Heaton Dainard also provides property management services in Bellevue, Seattle and the surrounding Puget Sound communities.