Renovations helps us thrive in recessions
To give you a sense of what it’s like to invest with us, we’re sharing how we approach renovations at our apartment complexes and how spending $10,000+ per unit sets us up to thrive in the recession. Let’s start by looking at some before and after pictures.
We have to consider the impact of an economic downturn before we examine our renovation strategy. A recession impacts the luxury apartments first. Residents at these Class A luxury apartments cut back on their spending and look to move into more economical Class B apartments. This causes Class A apartments to reduce their rents to keep occupancy high, which in turn prompts Class B communities to reduce their rents, which in turn encourages Class C complexes to cut their rents to stay competitive. But, this domino effect also creates a unique opportunity where residents in Class C apartments can now afford to upgrade to Class B communities and so on and so forth.
Our remodel scope—granite countertops, new cabinets, stainless steel appliances, in-unit washer/dryer, gym construction—might be viewed as overkill for our Class C apartments. So why do we still spend millions to outfit our communities with Class A finishes? Because we’re hedging against both effects stated above. Our residents have renewed leases with us these past few months because our units are nicer than what they would get by moving up to a Class B apartment. In the event we need to lower our rents to match competing apartments, tenants will choose our modern unit at the same price. So we’ve created a subclass of property that keeps our tenants happy while attracting new residents in a now competitive rental market.
See more pictures on our portfolio page.
