Adding value to a multifamily property is what allows us to raise rents and earn a solid ROI. But how do we choose a contractor? As owners, how active should we be in managing the construction itself? What is the property manager’s role in a construction project? How do we know what amenities work in a particular market—and what they’re worth to renters?
Ira Singer is the Principal at Mosaic Construction, a design-build industry leader based in Northbrook, Illinois. Mosaic provides best-in-class renovation, remodeling and building services for multifamily, residential and commercial property owners and managers. Marc Rutzen is the CEO of Enodo, a machine learning platform that analyzes multifamily investments and calculates the ROI on value-add amenities.
Today, Ira and Marc join me to discuss the ins and outs of doing a value-add multifamily deal. Ira explains how the owner, property manager and contractor work together on a large-scale construction project, sharing the integral role communication plays in the process. Marc describes how amenity pricing varies by market and weighs in on the trend to offer services like pet daycare and credit card payments. Listen in for insight around making value-add choices that will allow you to increase rents, decrease operating costs, and boost your ROI overall!
Key Takeaways
The role a construction company plays in acquiring property
- Site visit, bring architect if necessary
- Discuss scope of work + lend eye as ‘building inspector’
The owner’s role in overseeing a construction project
- Review daily updates (photos + written explanation)
- Make important decisions
The property manager’s role in a construction project
- Provide access and notify residents
- Communicate with onsite project manager
How to approach large-scale value-add projects
- Empty building for full unit makeovers
- Two-day refresh of occupied units
Ira’s advice on hiring and managing a contractor
- Develop relationship with construction partner
- Monitor progress with strong communication
What construction gone wrong looks like
- Failed inspections
- Poor communication, execution
Ira’s insight around how to increase ROI
- Pay attention to building envelope
- Solid roof, gutters, windows and doors
Ira’s tips for reducing expenses on a property
- Maintenance-free siding and windows
- Efficient HVAC system, insulation in attics
How amenity pricing varies by market
- Rooftop deck $32 nationally, $45 in Miami
- Pool $30 in Miami, $50 in Chicago
The trend toward offering services
- Pet daycare and dog walking
- Storage (e.g.: package lockers, bikes)
- Accepting credit card payments
Connect with Ira
Connect with Marc
Resources
National Apartment Association
Podcast Show Notes
