How We Renovate Properties So Quickly

September was a solid month for us. We bought two new properties this year and we have been quickly renovating those properties. It is still a very competitive market to win deals, but we have been consistently making offers and hope to have another deal soon.

This month we’ll discuss one of our competitive advantages, having an in-house construction crew on the payroll. Also, one of our properties won the award for Renovated Community of the Year.

Our competitive advantage is that we have an in-house construction company that handles all the interior renovations. Our construction team is hired as full-time employees, is paid a competitive salary with health benefits, and only works on our properties. This allows us to renovate properties quickly with high-quality craftsmanship.

The value-add business model is based on increasing the net operating income (NOI) through renovating the interior units and community amenities. We identify underperforming properties and spend millions on renovations to have the nicest units.

This is counter-intuitive as most investors will reduce their renovation scope and budget. But our team doesn’t shy away from hard work to maximize profits and reduce risk.

Our property, Haven on Thomas, was purchased in February 2021 and we have already renovated 45% of the units. Sometimes we renovate 15-20 units at once. This can be a daunting task for any team of contractors.

Below is a picture of our typical renovation scope, which includes brand new cabinets, granite countertops, stainless steel appliances, under-mounted sinks, new flooring, and new light fixtures.

At first, we hired 3rd party contractors. We were quoted 2-3 weeks to complete our renovation scope. Instead of taking 2-3 weeks, the contractors would take 8-12 weeks. That was lost revenue due to the opportunity cost of having a vacant unit.

It became a game-changer when we became vertically integrated. We were able to benefit from:

  • Consistent quality work
  • Reliable and reduced labor costs
  • Reduced timeline for to complete our renovation scope

Commercial multifamily is a business, and the valuation of the business is based on a multiple of how much revenue it produces. With each unit we renovate, we can rent it at market values and increase the NOI.

Best Renovated Property Award

Last month we won the Best Renovated Community award in Phoenix from the Arizona Multihousing Association (AMA). When we were nominated for the award in 2020, we owned the property and were actively renovating the property. We found out we won the award in 2021 after we sold the property for an 80% profit in 21 months.

It is an honor to win this award, especially with so many other properties being repositioned in Phoenix.

Read the press release on AZBIGMEDIA.

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