Retrofitting a building isn’t for the faint-hearted but can be fun and a solid experience in apartment building ownership. It also can prove to be extremely rewarding and profitable. Renovation and refurbishment of existing buildings represent an opportunity to upgrade the performance of buildings and an investment into your asset’s ongoing life. There is a big difference between the actual age of a building and its relative age.
One way of identifying potential items for renovation, repair or upgrading is to look at a complete list of potential due-diligence items from an Agreement of Purchase & Sale.
Renovations & retrofits of existing buildings are an opportunity to upgrade a building for its ongoing life expectancy and profitability.
Some of the areas that may need action will vary from environmental, energy, structural, concrete, roofing, HVAC, windows, balconies, elevators, common areas, and full or partial suite renovation.
These items can take time and good management will always be thinking of what is next in a proactive way. Some landlords let their buildings rundown into a dismal state thinking that this was the best way to profit. Many of those landlords lost a lot of money when it came time to dispose of the asset. Selling.
It is obvious today that the nicer the suite/building/area the more rent revenue in terms of rental income per suite. As a rule of thumb, the better the condition the building is in the higher the rents will be resulting in a higher value at the time of a sale and financing. Some call this forced equity and others call it maximizing their investment. Investing in apartment buildings is a business and a business that needs to be grown, improved, and expanded.
For a quick reference, I have included one below:
- Rent Roll
- Tenant Rental Status Report
- Survey
- Taxes- Interim or Final
- MPAC Statement Showing Individual School Tax Paid Per Unit
- Zoning and Permitted Uses
- Appraisal
- Mortgage Statement(s)
- Insurance Policy
- Insurance Quote
- Phase One Quote
- Management Contract
- Superintendent Contract
- Gas Bills
- Hydro Bills
- Water & Sewer Bills
- Other- Telephone, Cable TV. etc.
- Elevator
- Additional Revenue Contracts
- Floor Plans or Unit Square Footage
- Pest Control
- Snow Removal
- Land
- Maintenance & Repairs
- List of Chattels Included in Sale
- Fire Retro Fit Letter
- Fire Safety Plan
- Annual Fire Inspection Certificate
- Blueprints of Buildings
- Capital Item Repairs/Improvements
- Environmental Phase I
- Environmental Phase II
- Environmental Phase III Hazmat Removal
- Engineers Structural Report
- Asbestos Report
- Tenant Rental Leases & Rental Applications
- Commercial Lease(s) if Any