Step By Step Story Of A Recent Rental Property Turnaround.
So, you just bought a beat up, rundown property…what’s next? In Rhode Island, we consider a property busted out if you are paying less than $50,000 per unit. For example, if you bought a 5 family property for $210,000 you certainly bought a fixer upper! What I am going to do now is go over a property that I recently purchased and how the timeline of events went. Every property and situation is different by nature, but they usually all have some of the same tendencies and characteristics. Let’s jump into those now.
Day 1 – The closing just happened and the owner informed me that 2 of the 5 units are vacant. In addition, his keys are not labeled and doesn’t have contact information for the tenants. So, I head out to the property and post new management notifications in the mailboxes and on the doors of the occupied units. I head into the vacant units and conduct an assessment of the condition. One of the units needs appliances, minor touch ups, and a thorough cleaning. The other unit needs a full rehab top to bottom. So, I order the appliances and arrange the workers to get the 1st unit ready.
Day 2 – The workers button up the pending items and cleaning in the 1st unit.
Day 3 – The workers begin work in the 2nd vacant unit. This job takes about 2 weeks to complete.
Day 5 – Appliances are delivered for the 1st unit.
Day 6 – Leasing agent takes photos/videos of the 1st unit and gets it listed for rent.
Day 7 – The other tenants in the building start submitting service requests for long deferred maintenance. Our staff makes appointments with the folks to start addressing what we can. An important item to note is that I never offer capital upgrades while the tenants are in the property. Examples of capital upgrades are painting, cabinets, counters, flooring, light fixtures, etc. These items are not feasible to do while the unit is occupied.
Day 14 – The 2nd unit has been completed.
Day 15 – Leasing agent takes photos/videos of the 2nd unit and gets it listed for rent.
Day 16 – The 1st unit has been rented.
Day 30 – All pending, deferred maintenance has been completed in the occupied units. All tenants then receive rent increase letters accordingly. All 3 occupied units had their rent’s doubled because they were paying between $400-$450 respectively. No units in 2019 are to be lower than $700 in my opinion.
Day 35 – One of the tenants refuses the rent increase and submits notice to vacate.
Day 40 – The 2nd unit is rented.
Day 60 – The 3rd unit has been vacated by the tenant refusing to pay the rent increase.
Day 61 – Workers are sent into the 3rd unit and the job takes about 10 days to complete.
Day 71 – Work in the 3rd unit is completed, and the leasing agent takes photos/videos and gets it listed for rent.
Day 73 – The 3rd unit is rented.
Day 80 – Tenant in the 4th unit elects to move into subsidized housing instead of paying rent increase.
Day 90 – The 4th unit is vacated and the workers commence the renovations. It takes 14 days.
Day 104 – The 4th unit is completed and the leasing agent takes photos/videos and gets it listed for rent.
Day 108 – The 4th unit is rented.
Today – At the moment all 5 units are occupied. There is just 1 unit that is still in original condition with the inherited tenants. At this point I am comfortable with that ratio. Eventually when they move out the house will be 100% turned over and ready to refinance. The short term goals now are to paint the hallways, clean out the basement, and add laundry in the basement for tenant use.
This is a sample of a fast-tracked property on many accounts. This timeline is extremely quick because I have the knowledge, experience, and access to materials/vendors at my fingertips. If you are a first timer this timeline will certainly be stretched out, and more roadblocks will occur. Don’t be scared though! You have to stick your neck out in life in order to reach your goals. If you want to sit in your easy chair complaining, bitching, and being a Monday morning quarterback you will be stuck there forever. Get motivated, get hungry, and roll up your sleeves. I am off to my next project, talk to you later!
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Gregory Rice is the Vice President of franchise sales for Nexus Property Management™.
Nexus Property Management™ is a National Property Management Franchise that manages all types of rental property from single family homes or condos to large apartment buildings and complexes.
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