With the newer, high-end multifamily units entering the market, older units tend to fall flat competing for tenants. Many of these property owners struggle with attracting renters and it seems that the property is more of a burden than it is an investment. The solution is to find the perfect mix of upgrades that will improve the property and overall return on investment. Expert advice and research have concluded certain upgrades will make your multifamily property stand out; here are a few of them:
1. Embrace Smart Technology
Age groups younger than 35 are major players in the rental market today. A recent survey shows that 65% of households headed by those younger than 35 were renting. With the change in renter demographics, properties need to adapt to their increased standards and implement features that would meet their demand for smart home tech. Noticeable upgrades that will set your property apart would be keyless door locks, app-controlled thermostats, smart lighting, smart surveillance cameras, and more.
Pew Research states that millennials are willing to pay an average of 20 percent more a month in order to rent a home with smart technology. So although these upgrades are initially costly, the ROI is extremely high. The available products are endless, but even implementing one will make all the difference to prospective tenants. Smart home features offer upgraded technology and heightened security measures, which is extremely important to all age groups.
2. Freshen Up Your Property
Almost all properties can use improvements on the inside or outside. There is a large variety of ways multifamily units could be upgraded. Here are a few:
- New paint coat: Either the exterior property wall or the walls of each unit inside could use some fresh paint
- Landscaping: The outside appearance can make all the difference to potential renters, so be sure to improve the curb appeal. If your property has lawn space, make the most out of it. A decorated patio with lighting, a grilling space, and durable furniture can give tenants a desirable green space, especially in more urban areas.
3. Add Amenities
Amenities are a huge selling point for multifamily properties, so take advantage of them. From community to in-unit amenities, there are tons of upgrades that tenants are looking for.
- Community: wifi, parking, a gym, a pool, washing machines, and pet-friendly features.
- In-unit: air conditioners, upgraded kitchen, appliances, and pet-friendly units.
For many potential tenants, the lack of amenities can possibly be the reason that they do not sign a lease. These amenities do require capital investments into properties, but the price can be paid off through rent increases. Even with a higher monthly rent, amenities will persuade tenants that they get the best value for the rent price.
4. Cash In Laundry Revenue
As mentioned, laundry is an important amenity that can really rent out your units. Nowadays, people are not willing to walk out to the laundromat and wait for their clothes to dry. On-site laundry machines provide the convenience that many tenants are looking for and will attract and retain quality tenants. Bonus: it also adds revenue to your property. Key statistics show that coin laundries generate cash flow between $15,000 and $300,000 per year. So, if you decide to install communal laundry machines, coin machines are a great option.
5. Consider Short-Term Rentals
With a projected annual growth rate of 7.2% this year, short-term rental markets are the perfect fit for multifamily properties. Revenue from short-term rentals can come in a few ways such as:
- Airbnb-style rentals: If your property has vacant units, consider turning them into Airbnb rentals. The Airbnb website states that almost 2 million people sleep in Airbnbs a night. The growing demand for listings is a perfect opportunity to occupy rooms for extra passive income.
- Month-to-month rentals: Month-to-month leases are agreements to rent a space on a monthly basis with the ability to vacate the property with short notice. You can tack on a sizeable premium for these leases and considerably increase profit margins. Analysts from 2nd Address researched 8 major cities and found that monthly rentals are on average 87% more expensive than long-term rentals. Another benefit is that hosts deal with less turn-over with month-to-month leases and can enjoy more flexibility than with long-term rentals.
- Contract rentals for clubhouse: If your property has underutilized amenities such as a gym or clubhouse, it is a perfect opportunity to rent it out. Is your fitness center collecting nothing but dust? Rent it out to fitness instructors or yoga teachers. Tenants will enjoy the variety of services and you will be earning money for amenities that were otherwise inoperative.
6. Go green
Sustainability matters to many renters, especially millennials. Green improvements provide social, environmental, and monetary benefits. No matter how old a building is, energy-efficient practices can be used throughout the property.
Going green does not require dramatic and expensive changes, but it can start with the little things like replacing old light bulbs for long-lasting LED types or switching out energy-draining appliances for energy-efficient ones. For tenants who pay their own utility bills, environmentally-friendly appliances go a long way in cutting down their bills.
7. Increase lease rates
After implementing some of the mentioned upgrades, you could possibly negotiate with current or prospective tenants about a rent increase. With upgrades, current tenants are more likely to renew their lease, even if there is a price increase. New upgrades are attractive to almost all tenants, so really leverage this.