4 Classic Mistakes to Avoid During Asset Improvement
Asset improvement is one of the most effective ways to enhance the value of multifamily property and maximize your return on investment. The strategy involves improving your property aesthetically, structurally, and functionally, to help you attract more renters and higher rentals. Like any other investment, however, asset improvement has it’s fair share of cons, if you don’t do it the right way. Let’s look at four classic mistakes to avoid during an asset improvement project.
1. Working on your property more than required
While asset improvement and repositioning help increase your property’s value, you don’t want to over-invest in the property. If your property lies in an area where you do not expect tenants to pay high rentals, plan your asset improvement strategies accordingly. Going over-the-top with your asset improvement initiatives may please your tenants but won’t give you the expected rentals. Have a pre construction strategy in place to ensure you invest only what is required to boost your rentals.
2. Assuming you can change the class of every property
Asset improvement can help you change a property’s layout and make it a better living space for your renters. You can increase the standard of living of your renters through interior and exterior renovations; however, you can’t switch the class of every property with asset improvement. That said, don’t expect to convert a 50-year-old property in a C-Class neighborhood into a B-Class property with asset improvement or repositioning.
3. Underestimating the project expense
Asset improvement and repositioning are cost- and time-intensive. Even projects involving minor improvements can cost between $1,000 to $3,000 per door. If you go for major improvements, be ready for invest more than $10,000 per door. That’s why comprehensive pre-construction planning is vital. Pre-construction planning with the help of a professional multifamily contractor helps you assess the property in detail and evaluate the scope of work required.
4. Erroneous assumptions on the extent to which you can raise rentals
Even if you make your property a visual delight with loads of modern amenities, don’t just expect the renters to pay any amount in rentals. First analyze who your renters are; are they millennials or baby boomers? Compare other rental units and and know the rates your competitors are charging. Such groundwork will help give you an idea on how much rent you can expect from your renters in your area, allowing you to invest accordingly in your asset improvement.
If you’re looking for ways to improve the value of your property and increase your return on investment, asset improvement can help. To get the most out of the strategy, you must avoid the pitfalls discussed above and any other common mistakes associated with asset improvement. Partner with our interior & exterior renovation experts to increase the value of your property, and avoid unnecessary expenses. Our full spectrum of pre-construction planning services helps in assessing your property to discover the precise scope of work required to enhance its value. To learn more about our services or discuss your asset repositioning requirement, fill out our contact form or simply call (972) 432-6922.