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Step I: The Needs Assessment - Creating the Right Renovation Plan

  Prior to developing the renovation plan it is important to understand the goal of the renovation, which for the typical owner or management company is to:                                                                                                                 Maintain or increase market share Increase rents  Determine whether to reposition or redevelop Increase NOI  Increase ROI for  Having performed hundreds of millions of dollars worth of renovations over the years both as a contractor and as an owner; I have yet to find a company that has a rock solid development planning process in place.  I have found, that in most instances, the plan is developed by the operations, asset management or rehab group or left to the discretion of the general contractor, being told, "Do it like the last renovation you did for us". The absence of proper planning due to lack of relevant information often leads to implementing the wrong strategy, higher costs, frustration and unmet expectations of owners, residents and investors.  So what is the formula for a successful renovation?  Understand the needs and desires of the current and target resident.Build a plan to reach the goals of the company.  It's not about a faster and cheaper renovation. It is about increasing the NOI or ROI or simply delivering the right product to the right market.  Create a detailed scope of work and relevant bid documents to get accurate estimates.   Therefore, is there an understanding what your contractor needs from you to provide the most competitive bid to meet your expectations? Provide training to the onsite staff about the renovation process, i.e.,......
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The Property Investment Checklist

ChecklistWhen it comes to selecting an investment property, there are a few issues that every landlord must take into account. No matter how wonderful a property is or how eager you are to invest, never make a property investment without carefully evaluating the following items on your property investment checklist. 1. Calculate your profitability.Although determining the likely profitability of an investment property may seem like a given, you might be surprised how many investors find themselves in a losing situation simply because they fail to do the math. Before buying an investment property at any price point, be sure you carefully determine how much rental income you are likely to generate on an annual basis. Weigh this against not only your mortgage and property taxes, but also all of the other costs that are likely to occur over the course of a year, such as advertising vacancies and doing general repairs and maintenance. When calculating these costs, be conservative when estimating income and err towards over-estimating your outgoing expenses. You want to make sure you have enough wiggle room in your profit margins to afford your investment property payments no matter what unforeseen events may unfold in a given year. About.com’s real estate business page offers some great calculation tools that will help you calculate your risk based on several different variables. 2. Get inside renters’ minds. Sure, you’re the one who’s purchasing the investment property but never forget that you are purchasing it for the purpose of renting it out......
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Taking Charge of Contractors

ContractorHaving a good stable of contractors at your disposal is one of the more underrated tools for property management success. Following are some points to consider and a few tips for finding contractors that will make you (and your property) look good. As a property manager, you’re not expected to know how to solve every single issue that arises under your watch. But you are expected to know exactly who to go to when problems occur. Contracted specialists are crucial to your business for a couple of reasons: 1. You want your tenants to feel taken care of at all times. From a renters’ standpoint, one of the biggest benefits of renting is that the responsibility for repairs and maintenance falls on someone else’s shoulders. One of the best ways to earn your tenants’ trust and loyalty is to demonstrate that you are reliable when it comes to resolving any necessary repairs as efficiently as possible. It’s also important that these problems are solved correctly the first time. 2. Fixing problems as soon as they arise is one of the best ways to save money in the long run. When there are dozens of things to address on a daily basis, it can be so tempting to let that dripping pipe or cracked window wait until next week. In property management, though, putting things off is never a wise idea. A dripping pipe can turn into a water-damaged ceiling; a cracked window can turn into a full-blown window repair. With both......
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Increasing Property Values

No matter how big or small your budget is, there are always ways to increase the value of your investment property. Whether you’re looking to make updates for efficiency, improve aesthetics, or just make general miscellaneous upgrades, following are some ideas for boosting your property’s worth. Roofing If you suspect you may be selling your property any time in the near future, consider your roof’s condition. Yes, this is a high-ticket item (approximately $10,000 to $15,000 to replace your current roof), but it’s also one of the first thing inspectors, real estate agents, and potential buyers will look at. Even if your roof isn’t in need of repair at this precise moment, chances are your property value will go down if buyers think that they may have to re-roof within the next few years. If your roof is on the older side but not quite ready for replacement, consider getting a roof certification. For the comparatively inexpensive price of about $250, a roofer will guarantee that your roof will not leak for two years—and if it does leak within that period, he will make the necessary repairs free of charge. Energy Efficiency When the time comes to replace unit appliances, you should strongly consider installing energy-efficient upgrades (such as EnergyStar). This is a great selling point for tenants and buyers alike and it will also pay off on a month-to-month basis that really adds up in the long run. If you are covering your property’s electric bills, energy rates can be......
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Increasing Cash Flow by Maximizing # of Bedrooms

Although converting a unit into a larger (or different) space may be cheaper than purchasing a new property that fits your expanding investment property needs, it’s nonetheless a huge undertaking, both in terms of logistics and expense. If you’re thinking about a conversion, make sure that you carefully consider three important questions: Why? When? How? Why should I convert my unit? For the purposes of this blog, we’ll consider unit conversion in the context of creating more bedrooms (for example, converting a one-bedroom unit into a two-bedroom unit). The obvious reason for this sort of conversion is to increase your cash flow. Examine rental rates in your area to determine how much more money can be generated by renting out a multi-bedroom unit. Also consider the type of tenants that are generally seeking rentals in your area. For example, if your demographic is college students (who generally like to rent with roommates) or families (who generally have more people and, therefore need more space), chances are you would benefit by offering units that are set up for more than one tenant or couple. Research is essential. In some cases, multi-bedroom units may generate only slightly more rent that single-bedroom units. Also, consider the costs of the conversion and calculate if the additional rent will not only cover the renovation, but also generate a higher profit margin over time. Last but not least, when considering the costs of conversion, make sure you account for rent that will likely be lost (not only......
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FHA Multifamily Loans - 223(f) Acquisition or Refinance

With many lenders on hold the topic of the day has been FHA.The FHA multifamily loan programs have been in place for over thirty years.  They continue to be used regularly and have closed as much as $8 billion a year in new business.  With commercial lenders on hold there has been renewed interest in these valuable programs.  The following summarizes the 223(f) program.The 223(f) program provides high-leverage long-term permanent debt to refinance, purchase, or moderately renovate existing apartment communities on a fixed-rate, non-recourse, assumable basis.  The loan size is relatively unlimited and the properties can be located in any state, Puerto Rico, Guam, and the US Virgin Islands.The property must contain five or more  units and be at least three years old based on the final certificate of occupancy.  (HUD recently granted waiver authority to the field offices through September 2009  to refinance younger properties that have stabilized.)  Commercial space cannot exceed 20% of the total net rentable floor area or 20% of effective gross income, including a 10% vacancy allowance.  Repair cost are limited to 1) $6,500 per unit as adjusted to FHA's high-cost factor for the area; 2) a maximum 15% of "as-improved" market value; and 3) cannot involve replacing more than one major builidng companent.Borrower Advantages:  35-year amortization period; eligibility for both market rate, subsidized, and LIHTC properties; NO rent control restrictions, rental subsidies, or limitations on owner return; non-recourse; AAA credit enhancement with Ginnie Mae securitization.Guidelines:Term:  Up to 35 years fully amortizing with level payments.Loan Size:  Unlimited, nationwide.Loan Amount: ......
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Dealing with Tenant Complaints

Angry TenantWhether you’re dealing with a tenant who files complaints rarely or frequently, due diligence is always essential. Tracking and addressing tenant complaints in a timely manner is important not only for keeping your tenants safe and happy, but also for protecting yourself and your property in the long run. 1.    Encourage tenants to come to you. As with maintenance, tenants should be encouraged to come to you with any complaints they may have as quickly as possible. Sure, there might be some tenants that overuse this privilege, but the vast majority will not. Provide a number they can call at all hours—and be sure the number’s voicemail includes an emergency number callers can utilize during off-hours. 2.    Create (and use) an official tenant complaint form. Although it may seem unnecessary at times, tracking each and every tenant complaint is important. These forms will provide a record of the situation and what you did to mend it and also, in some cases, provide yet another way for you to record repairs and upgrades that have been completed in each unit. On this form you’ll want to include the date of the complaint, the tenant’s name and unit, and the nature of the complaint. You’ll also want to record resolution action items, the date the issue was resolved, and how it was resolved. Since we just talked about eviction last week, this seems like a good time to point out that, in some states, tenants may be justified in non-payment of rent if......
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Which is more important? Price? Quality? or Service?

What is more important to you as an apartment investor, owner, or contractor doing a remodel in a rental property?

Is everyone only looking at price now because of our economy? Or do some people still give credence and importance to quality of materials, loyalty to the vendor they are getting a bid from, timeliness of receiving the bid, the delivery, and installation?

 I would really like to know what is more of the  driving force in the market. We have seen a large upswing in people wanting a bid, but putting more emphasis on Price than anything else. What does that say about the relationships you have built with your vendors? About our society as a whole?

 

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Denver Apartment Trade Show-May 20, 2009

How many of you apartment managers, apartment personnel, investors, contractors are going to the Denver Apartment Association Trade Show at the Merchandise Mart on May 20, 2009? Not many? A Few? None?With today's economy, it's more important than ever to get the best value for your money? Am I right? So IF you are going to the Trade Show; and IF you want a Reputable Vendor who can assist you with your cabinet, countertop, or custom casework needs, then you need to stop by our booth #414-Front Range Cabinets and visit us. At Front Range Cabinets, we offer over 8 Different cabinet lines, everything from Truckloads for Multi Family Projects to single kitchens. From Contractor cabinets to Semi Custom as well as Frameless cabinets. Are you looking for Countertops for a project? We do laminate in house and have access to Granite, Quartz, and Solid Surface materials as well.Custom Casework needed? We do that too. We build in house our own Frameless cabinets and have done MANY Teller lines for Banks, Custom desks, and cabinetry. Do you need cabinets, countertops, or casework delivered or installed? We can help you with that as well.Give us an opportunity to give you a competitive quote on your next project. Front Range Cabinets wants to work with you and will offer you not only competitive pricing, but exceptional service, delivery, and installation.Look us up and lets talk about how we can help you upgrade your property to get higher rents, remodel to sell a property, or just......
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Frugal Fix

This idea definitely won’t blow your budget.  If your community is starting to show wear and tear, but your budget doesn’t include new doors, cabinets or floors, the Sharpie touch up permanent marker is for you.   A few seconds and a few strokes with this permanent marker will get things looking like new.  At $3.00 for three, in light, medium and dark wood colors, it’s a recessionista’s friend.   One word of caution – don’t try to color the whole cabinet…some things really do need to be replaced. http://www.sharpie.com/enUS/Product/Sharpie_Touch-Up_Permanent_Marker.html

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