The Capital Stack
In the past, one of our biggest challenges was finding contractors who consistently delivered quality work on time. Relying solely on third parties often led to repeated delays, with missed deadlines and countless excuses. This year, we decided to tackle this issue head-on.
Our New Hires: In-House Renovation Team
Exterior Renovation Crew
At the start of the summer, we faced a lengthy to-do list that included painting, replacing exterior railings, installing house numbers, repairing decks, reshaping landscaping, and more—all for just one property. Managing these smaller projects took considerable time, from gathering quotes to selecting contractors and waiting for their availability. To streamline the process, we initially hired two experienced professionals who had previously run their own exterior painting business. Shortly after, we added a third member to the team. All three had a background in landscaping, deck repairs, and similar tasks. We agreed on a fair hourly rate and got them started immediately.
They began with our Milford property and handled everything from cleaning up the landscaping and installing new exterior light fixtures to painting both buildings, replacing railings, and taking care of various other projects as they came up.
Once Milford was completed, we quickly moved the team to Ortonville. Within days of closing, they painted a vacant unit, handled small repairs, restored the mailbox stands, and managed to paint all eight decks in a single day. Because these repairs were completed so quickly we were able to prepare the exterior for photos and give the property an immediate facelift. The completed improvements played a key role in securing a lease for two of the three vacant units just weeks after closing at our full target market rates. Our usual process would have required finding multiple local contractors, gathering quotes, selecting the best, and waiting for their schedules to clear. Now, we’re able to complete these tasks with much greater speed and quality than ever before.
The crew is currently completing a similar scope of work at our Royal Oak property as they did earlier this summer at Milford, and we’re excited to see the transformation. They’re now handling tasks that would typically require two different third-party contractors, all at once.
Interior Renovation Crew
Recognizing the success of our recent strategy, we’ve expanded our team by hiring an additional crew dedicated to unit turns. This new team of four professionals, who previously specialized in flipping houses, brings a wide range of skills, including painting, plumbing, and electrical work. They have already efficiently turned two vacant units present when we acquired the Village Court apartments in Ortonville and are now working on a vacant unit in Royal Oak.
Our primary objective with this unit turn renovation team is to minimize the time required to prepare and renovate units after a move-out. Although we’re still in the early stages, we are confident that this initiative will significantly benefit our properties by accelerating turnaround times and reducing vacancy losses.
In Conclusion
Reducing vacancy is crucial for maximizing the financial performance of a property. When units are turned quickly and efficiently, it minimizes the time they sit empty. This consistency not only improves cash flow but also enhances the overall value of the property. By having dedicated teams in place to handle both exterior and interior renovations, we can swiftly address any necessary repairs or updates, keep our properties in top condition, and maintain high occupancy rates. This approach ultimately leads to a more profitable and stable investment.
Major Market News
1,296 Unit Apartment Project
Resia, a subsidiary of MRV, advanced plans for a 1,296-unit apartment project in North Miami Beach. The New North Town Center, featuring five 12-story buildings, received preliminary approval from the city’s Planning and Zoning Board, with final approval pending. Resia acquired the 17.8-acre site for $57 million in 2022 and scaled down a previously approved “micro-city” plan. The project will not utilize Florida’s Live Local Act, as it remains below the maximum allowed density.
Source: TheRealDeal. (2024, June 12th) Resia plans 1,300-unit apartment complex in North Miami Beach, amid record South Florida multifamily construction. https://therealdeal.com/miami/2024/06/12/resia-plans-1300-unit-rental-complex-in-north-miami-beach/
Tips and Tricks
Terms-
Vacancy loss: Vacancy loss refers to the potential rental income that is lost when units within a property are unoccupied. This loss occurs because, while the property still incurs costs like maintenance, utilities, and mortgage payments, it does not generate revenue from empty units. Vacancy loss is a critical metric in evaluating a property’s financial performance, as high vacancy rates can significantly reduce the property’s overall income and profitability. We aim to minimize vacancy loss by quickly turning over units, maintaining high occupancy rates, and implementing effective marketing and leasing strategies.
