Renovating To Rent: Keep Costs Low

A: For any business decision its easy to understand that to make the most money you need to spend the least amount of money (keep expenses low) while bringing in the most amount of money (keep revenue high) as possible. Amazing how smart I am right? But when it comes to Manhattan real estate and renting out your apartment for the most money, keeping costs low becomes ultra important. And that means spending the LEAST amount of money possible to get your apartment into renting shape that will bring in the most revenue possible. Here's a guide.

Its a good time for landlords in NYC. We are getting close to the most popular move in date in Manhattan, September 1st, and rental vacancy is under 1%. Demand is high as the rental pool increased with so many potential buyers priced out of the real estate market either because of rising rates, too little options to choose from, or prices just too high. Add it all up and there are plenty of people looking to rent in New York City.

But with management company's owning most of the rental inventory leaving your competition with fully renovated new units to rent out at top dollar, what is an independent investor to do to maximize rental revenue without spending tons of cash fully renovating their sublet friendly property? In a nutshell; floors, appliances, paint job, cleaning.

Unless your place is an ultimate dump, chances are you can salvage your property and ask similar rental premiums that most managed buildings do without having to fully renovate the apartment. Lets break it down by order of priority.

1. Refinish Your Floors - Floors are usually the first thing buyers or renters notice when they enter a property. I can't tell you the difference in 'aura' that a newly refinished floor provides to a buyer/renter as opposed to a lifeless stale floor that drains life from the apartment. The cost of refinishing a floor is so low that doing this renovation makes alot of sense.

For approximately $2.25/sft (more if your floor is damaged or tiles missing) you can have your old lifeless floor sanded, stained, and poly'd as long as there is enough width on the existing floor to withstand the sanding phase. Most floors have about 2-3 refinishing lives in them.

I like to use Marc at Floor Works New York as I have worked with him a number of times and so far every one was overly satisfied with the quality of work. The last time I used them was for an exclusive sales client that listened to my advice when I consulted on what to do to prep the property for sales marketing. Here is the Before & After shots so you can see the difference. In the end, we got a bidding war in 2 weeks and a contract signed a week later.

This apartment, 314 W 56th Street - Unit 1A, was 550 sft and cost aprox $1,000 to fully refinish the hardwood floors.

2. New Appliances - If you ever gone through a full kitchen renovation, you know all too well that it is not cheap, it is not quick, and rather, it is a big headache! Assuming your cabinetry and counter tops are in at least OK shape (no granite counters needed), you will be amazed at how much better your kitchen will look if you simply replace ALL the appliances. Go with stainless steel as long as it fits into the look and feel of your kitchen. They look better and won't show wear and tear as much as white appliances.

Buying new appliances is not as expensive as one would think. The going rate for Frigidaire stainless steel appliances are as follows:

Frigidaire Top Freezer Refrigerator - Aprox $949

Frigidaire Stainless Steel Gas Range - Aprox $900

Frigidaire 24" Granite Grey Interior Dishwasher - Aprox $549

Frigidaire 1.5 Cu. Ft Over Range Microwave Oven - Aprox - $369

So, all in all if you were to stick to the same company and try to get some sort of deal (which you probably can) you are looking at approximately $2,800 to replace ALL your appliances with brand new stainless steel ones. Compare that to the cost of fully renovating the kitchen (say $25,000 + 2-3 months of work) and you see why its a great low cost option for landlords looking to make their property more rentable on the open market.

3. Painting - A fresh coat of paint (white or other neutral color) is a must for any landlord prepping their property for rental market. Not only do custom dark colors make any apartment feel a bit smaller, but it may not be the taste of the potential renter that comes to view the apartment. Since you can't assume that renters have the capacity to visualize the place in their own custom colors, stick to plain white for marketing purposes. Plus the new paint smell gives renters the impression that the apartment has been worked on and is being renewed for the new occupant!

Hard to estimate the cost of painting but for my current 900 sft 1BR apartment I paid $600 to one of the porters to paint it with my customized colors and it came out great. A small price to pay for any landlord seeking to make their place into a blank slate for marketing purposes!

4, Cleaning - For heavens sake, please make sure your property is CLEAN before you bring any potential renters in. Especially the windows, kitchen and bathrooms! Hire a referred cleaning company (I am still looking for a good company to use and refer) to deep clean the property before any showings take place. Hopefully the property is empty so you don't have to worry about constantly cleaning up.

Overall, it should only cost $100-$300 or so depending upon the size of your property for deep cleaning. If you have the floors refinished than make sure you tell the cleaning company NOT to touch the floors! They might do more harm than good. Ideally, you want to refinish the floors first and then deep clean last!

For under $5,000 you can really turn your apartment into great renting shape that should be able to get you more money at the end of the day! Keep in mind that most management companies do renovate a unit before they re-rent it out so any potential renters that do come to see your place will compare it to fully renovated units they have already seen. The goal to you is to make yours at least comparable while keeping costs as low as possible!

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