Are you looking to get into landlord territory or expand your footprint? If so, multifamily remodeling and new construction is probably at the forefront of your mind. Constructing apartment buildings and duplexes designed to both attract potential renters and keep your current tenants happy is crucial to lasting success in this business. To help you succeed, here are 5 tips to approach the project strategically.
1) Gather Intelligence
First, you have to gather the intelligence necessary to make your project succeed. If you already have tenants, that means talking to them about what their needs are, what they’d like to see in a new construction or remodeling, and what rent they would be willing to pay.
In addition, you also need to research the area in which your project takes place to understand the realistic costs of rent you can charge once the project is done. That, in turn, will help you estimate the costs you are willing to pay for the construction project.
2) Evaluate the Market
A special part of gathering intelligence is to evaluate the market in which you are looking to build or rebuild your multifamily home. What is the current demand for apartment rentals? What do prospective tenants expect in terms of number of bedrooms, size of living room, outdoor space, and so on?
Knowing these aspects as early as possible will help in every stage of the planning process. You will be better able to estimate the costs and added value of your construction, while also gaining a better understanding of how quickly the individual units will rent out once your construction project is complete.
3) Estimate Your Costs & Value
Next, you should take the information gathered in the first step to estimate the cost a new construction or remodeling of an existing building would cost you. Be sure to both add up the individual expenses, and include a contingency for any unexpected costs that may arise. Particularly when remodeling an older building, you never know what you’ll find when opening up walls.
When estimating your expenses, it’s always good to keep in mind how much value each of the items will add to the house. For example, will a marble counter top in your kitchens really add much more value than a more durable and reliable Quartz alternative? The former may make sense for your own home, but for multifamily construction, going with cost effectiveness and reliability is key.
4) Plan Out Your Project
Knowing the costs you are willing to incur, it’s time to plan out the project from beginning to end. That means estimating the total length of time it will take to complete, as well as the external needs you may have for demolition (if needed), electrical contractors, and more.
One crucial part you cannot forget about at this stage is the necessary involvement with local government agencies. The area in which you are building may have specific sets of rules for new construction and remodeling projects, and knowing these ahead of time – as well as the steps you have to take to satisfy them – is crucial.
5) Get Professional Help
You can take on the planning, specialist hiring, and buying of materials yourself. Or you can work with a construction company who has successfully completed multifamily remodeling and construction projects, and can help you through every step of the process in order to maximize your chances for success.
Particularly if you are looking to build in Minnesota, we’d love to talk to you about a potential partnership. We know what it takes to build and remodel homes with multiple individual units, so contact us if you are interested in generating income long-term as a landlord.