Multifamily Residences: Deciding Between New Construction and Remodeling
Multifamily residences are different from traditional homes, especially when dealing with improvements. The housing market can be a challenging environment, and a constant question facing property owners is whether to build or to renovate an existing property. This is even more pertinent when dealing with a multifamily residence. Here are some of the factors that will help understand the considerations that can affect your multifamily property plans.
The markets. In recent times, construction costs have been on the rise, but they tend to fluctuate from year to year. This, plus changes in the markets can either be detrimental or beneficial to your multifamily residence plans. Property owners and landlords often show an interest in communities with diverse economic bases. Rents in these areas are usually higher and offer better cash flow to property owners.
Value-add properties. Analysts expect to see multifamily properties in previously untested areas. High-end single-family properties may start to lose money. Faced with this prospect as well as increasing construction costs, seeking value-add properties may be the best solution. High construction costs coupled with rising land prices can lead to losses for property owners. Value-add properties are those that require improvement to make them habitable or to bring them up to code.
Practical luxuries. Tenants want luxurious spaces without having to pay too much for them. Property owners must only think in terms of attractiveness but also long-term value. Upgrades that will increase the value and look of multifamily residences include:
Kitchen improvements: such as a new countertop and cabinets
Durable flooring: you can expect a multifamily residence to endure more traffic than a traditional home. Quality, hard flooring will last longer than carpets and will be cheaper to maintain.
New appliances: new, attractive appliances will add a modern touch, but an even more important benefit is energy efficiency. Tenants will appreciate the opportunity to save money, and this can make the property more appealing.
The community. The community is an essential determinant of the viability of a multifamily residence as a source of income. Tenants will not just be looking for a place to live. They will pay close attention to the amenities and services available. People who commute will need access to adequate public transportation. Access to fitness centers and other personal services can also attract renters or buyers.
Ultimately, deciding on ground-up construction or renovating an existing property will depend on the available capital. However, the points listed above can also play an important role in choosing the ideal area for a multifamily residence.