Ep #337 – Ira Singer – Multifamily Value-Add Construction

Here is some of what you will learn:

Value-add improvements
Unit upgrades
LVT Tile
Unit rehab turnaround time
The value of window replacements
Exterior upgrades
Water and intrusion issues
Rainwater management
Upgrading with Mini-split units
Dog and car wash areas
Package areas
Fitness areas
Different improvement for different asset classes
Common area improvements
Metrics for capital improvements

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Full Transcript Below:

Ira Singer – Multifamily Value-Add Construction (Ep337)  

Intro: Hi! I’m Rod Khleif. Each and every week I record an interview with a thought leader that I know you’re gonna get a ton of value from. Now here on YouTube are the video versions of my podcast, Lifetime Cash Flow through Real Estate Investing. Now to make sure you get the latest information please subscribe and hit the notification bell. Let’s get started. 

Rod:   Welcome to another edition of “How to Build Lifetime Cash Flow through Real Estate Investing”. I’m Rod Khleif and I’m thrilled you’re here. I know you’re gonna get tremendous value from the gentleman we’re interviewing today. His name’s Ira Singer and Ira owns Mosaic Construction which is a nationwide GC company that has done tons of work in the multifamily space. In fact lots of asset classes and so we’re gonna dig in. I mean he’s got tons of designations from Certified Green to Aging in Place for elderly housing to you know remodeling designations, building designations, renovation designations, that we’re gonna have a lot of fun today digging into the reposition aspect of a multi-family deal, meaning the renovation and improvement to increase rents. Ira, welcome to the show my friend.

Ira: Thank You Rod. Pleasure to be here

Rod: Awesome so you know let’s dig right into it because you know I really think you could add a tremendous amount of value. So you know the name of the game is value add the name of the game in the multifamily space is find a property needs some work, add value, increase rents, decrease expenses, improve the net operating income which will exponentially increase the value. So I know you’ve done a lot of this I think what I’d like to do is just get started with having you tell my listeners what are some of the most common improvements that you see an operator make to improve, to increase rents really is the bottom line. Now some of them obviously are necessary improvements just to increase the overall appeal but they’re all the bottom line is what everyone’s interested in. So what are the most common improvements that you see done?

Ira: So the improvements that are driving the market for the end-user are going to be the pretty ones, the functional ones. And we can talk specific we about those. We also have to pay attention to the asset as an overall value to make sure that you’ve got operating savings between heating-cooling, water infiltration and you know those part of the business. So let’s focus first on the renovation side because that’s what is ultimately attracting your renters. The unit upgrades continue to be probably the singular area of improvements up side you know to raise your rent. My assumption in the smart people that are listening to your podcast is that, when they own their assets, you know they are looking at what they need to do from a improving point of view based on what they’re paying for, if they pay for long, they’re going to be owning it and so the unit upgrade is typically on the radar screen of somebody owning or buying a real estate multifamily investment because that’s where the people are living and simple math can get you a multiple so you can figure out what your overall construction work is going to be. Cosmetic changes are easy, fairly inexpensive if they are literally swap outs within the existing unit. And it is common practice to have a paint and carpet refresh when there’s a move out that’s the opportunity when you would want to be looking into what else can be done for nice finishes, nicer what’s there the trend is an LVT-Luxury Vinyl Tile to go down in apartments versus carpeting hard surface tiles certainly in bathrooms depending on the market you’re serving for the apartment whether it’s stone countertops, whether it’s laminate countertops laminates come a long way laminate looks great in certain applications. But a new sink, a new faucet, light fixtures, a paint job, some new door hardware, those are inexpensive visual upgrades, people walk in and think that they’ve got a nice place that they’re living in. The refresh, the full design/build of units where it’s a $25,000 to $35,000 investment into the unit you’re doing significant upgrades. You’re putting in you know a washer/dryer in the units, you are changing the footprint of the kitchen, you’re expanding into family space where it’s a big open room you might have, you’re certainly going to have data ports as opposed to just outlets where people can plug in and charge their phones and their computers. So there’s smart little nuances that will make the unit itself look and feel better, will allow the owner to understand what that means for a rent impact $20, $60, $100 a month. That’s a lot of money in multi-family. It helps pay for the improvement. So those are some of the unit improvements that can be done

Rod: Let’s stop there if you don’t mind just to circle back you covered a lot of stuff real quick. So you know I know you mentioned door hardware. Now do you find a lot of operators actually changing out slab doors and putting in like two to four to six panel doors because they look so much nicer? Do you see that

Ira: Yes

Rod: Okay you see that happening yeah well great. Now when you say door hardware I’m assuming well you didn’t say but do you find that sometimes that even just putting in cabinet hardware can you know really increase the look in the kitchen? Simple little things like that

Ira: I do. I would say that if you’re going to do cabinet hardware, the cabinet market is such a wide spread of product availability and cost factor but you can do a small galley kitchen in a one bedroom typical let’s say you know hundred and eighty foot kitchen with two rows of cabinets you’re better off buying new and getting a nicer color and the new knob obviously. But that’s not a big investment the kitchen looks much better with cabinets and knobs than new knobs on old doors

Rod: Now fair enough fair enough and one of the things that I want to mention now the LVT that you know the tile I mean we’re finding operators putting it through throughout the whole unit or certainly throughout all the common areas living room, kitchen, dining room, everywhere but the bedrooms and sometimes even in the bedrooms. Now one of the things that I want to mention here like we’ve got an asset in which one is it, oh in Lexington Kentucky that we’re about to close you know that LVT works great on the ground floor but on some of the upper floors you have noise issues. So I want to flag that for you guys if you you know if you’re thinking about you know converting up a two-story you know where you’ve got a garden type apartments but they’re multiple level. Be very very careful on the second floor to check the noise factor with the LVT. The other thing I want to ask you about or mention actually mention just before we go any further, guys whenever actually will circle back to that I want to talk about the repayment of the costs associated with a reposition and some metrics for that but let’s dig into the larger. You were starting to talk about the larger you know twenty to twenty five thousand dollar rehab and just can you speak to some of the things that what you kind of did. You put in washer/dryers that’s a big deal. You’ve got to run water lines sewer lines take out walls take out floors that’s a big deal you know one of the things that we’ve done is like you mentioned, is open up kitchens you know you’ll see where you can take half of a wall out and people like that openness and yeah we just did that in our asset in Beavercreek, Ohio and it just adds such a dimension. Another thing we’ve done and see is where you kind of open like a almost like a breezeway kind of a thing where you’ve got a waist-high wall right it was just a full wall and we made it only a waist-high wall so you could see into that room as you’re walking down that hallway. So that’s the sort of larger type renovations that you’re alluding to. What are the sorts of things you know before we move on into the outside of the units and the you know the stability the asset, the construction, the systems all that stuff come, just want to make sure we’ve covered all the ground here. We talked about floors, we talked about light fixtures, we talked you know plumbing, you see if I’m sure you change out plumbing fixtures a lot yes and you mentioned stone countertops another one is quartz. Well I guess you could call that stone okay. It’s really is stone it’s a textured, it’s a manufactured product but it is stone. Any, before we move past this any other little ninja tricks for improving the desirability of a unit? you mentioned pores that’s a great idea to have those outlets that have the actual HDMI ports in them is that what you’re referring to?

Ira: Yeah I mean mostly the USB for regular outlets because HDMI

Rod: I meant USB, my, I’m not, I can’t even spell technology right okay

Ira: So yes that is something that we’ve seen. We have seen dishwashers added into units and under cabinet washer dryers. There is a Miele product that is under cabinet. Now you know plumbing floor drain if you have wood floors as your a multi-story building and you’ve got wood conventional framing construction, I agree with you about the LVT being a noise issue but if it’s a concrete building then you’ve got a concrete even lightweight concrete floors, you know it’s shared living the LVT is more durable. We work in a lot of buildings where pets are living and pets are better with LVT than they are with carpeting. We’ve done carpet tiles because that also helps with pets so you can swap out a carpet tile without having to replace the entire inside of the units, that you understand what I’m saying as far as making a 2-bedroom 2-bath with the kitchen and a washing machine with all the doors, all the floors, better lighting, better plumbing fixtures, new appliances, cabinets, countertops, you’re gonna easily get to $25,000 even if you’re putting in some lower to mid level finish trade that’s a lot of work and that’s not like you know a guy shows up with a truck and he’s in there for a day. The value to the owner about doing the unit worked is doing it in a systematized production type of methodology. So we’re coming in the units are typically vacant and we are coming in to do three to five at a time and within ten days of work, two weeks, we’re turning it back over three weeks at the max but that’s going to be a fairly substantive moving of plumbing electric etc. with city inspections that will delay some of the construction. So it’s you know it doesn’t have to be that, but that’s a play when you’re older stock with the new stock that’s coming out of the ground that you’re competing against in major markets or mid major markets where there are phenomenal buildings with amenities and amazing, with the units, a current owner has to keep up

Rod: Yeah and you know what you just said is really really critical guys. When you’re doing big rehabs like this you know his turnaround you just described two weeks maximum three weeks is very very impressive and obviously you’re going to turnover units that are vacant. I mean that just goes without saying and so you know when you’re doing your projections and you’re doing a reposition like this, it’s important to note that your vacancy is going to increase while you’re going through this period you know like for example on this 100 unit that we did in Beavercreek, Ohio. We projected up you know 15% vacancy for the first year – or a year and a half I’m just going by memory because we’re turning over units and as people are moving out we are repositioning them. And what you just spoke to Ira is really you know with anyone in this business, you’ve got to be expert at sequencing the work so that you know you have the right trades coming in after each other and you’re not painting after you’ve put the flooring in for example and things of that nature doing the plumbing work after you’ve painted. So you know it’s a project management component that I can imagine you guys are experts at. So that’s the inside of the unit now let’s talk about you know the building, the structure, the systems, what are the sorts of things do you get involved with and what suggestions might you have for you know someone looking at a property?

Ira: So I started my career almost 30 years ago in the window siding and roofing business and that was mostly residential work through my relationship building, we got into multifamily projects. We were doing windows siding and roofing work on community of assets not single buildings with eight to twelve even though we were doing windows in a building like that but doing a thousand windows in a four hundred unit community is obviously a different type of project. So the exterior building, the building envelope, the aesthetic appeal, the maintenance of the asset for what you choose as your finishes. Those are all cost sensitive, long-term investment perspective. There are efficiencies in utilities obviously window replacement is probably the least invasive and the most upside for a property owner that owns a masonry building, a frame building, a community building, inside of a large community when the replacements today the quality of the product even though it’s changing still in the evolving where it is today as to where it was 30 years ago for a vinyl thermal pane window, the performance is significant. So that’s an easy one if you have water issues you either have roof or masonry or exterior wall or window compromise. And so those are things that need to be addressed. You don’t have to tell any of your listeners the danger of having water infiltration coming into the building and what that means to your potential renter that is living in a compromised health mold situation. So the building envelope you know we work with masons. We have roofing, flat roof, shingle roofs, there are decorative accents that you can put. So if you can build out the front of your building with a covered portico that’s a fairly inexpensive nice facial upgrade. If you’re a single building, maybe not so much but on all your buildings in the community, that’s a way to make the entryway better clearly the buzzer. And the intercom system technology is way awesome for you just have to use your phones and you know there’s a camera function and there are smart comm systems to get into buildings. You know you wouldn’t hire me as a general contractor to fly out to Kansas City and replace your intercom system but if we’re doing a full building remodel though either exterior interior. We start on the exterior it’s not the sexiest part of the asset but I will tell you it’s the most important part of your investment

Rod: Yeah no question and let me let me speak to why you know guys if you’re going to be turning over units, your tenants need to see that you’re making improvements and to lease you know, that’s what people see. So you know if you start on the inside and you you wait to do the outside you’re getting the cart before the horse because everyone sees the exteriors. Now I want to circle back because you move very quickly and you add tons of great value here. I want to circle back to a couple things you said you know the smart technology is becoming so incredible as it relates to you know keyless entry and your HVAC turning your air conditioning up and down and like we’re integrating that into our Lexington asset. It’s gonna you know we’ve got a demographic there’s very tech-savvy it’s kind of a millennial demographic and so it just really appeals to that demographic. I love the portico idea that’s an incredible idea. Now I want to mention, I want to circle back to something else you said. You talked about water intrusion, guys if you have water intrusion, it should be either the klaxon should be going on the red light should be spinning I mean that should be like you’re number one priority to deal with because of the incredible damage that it can cause and you’ve got to figure out where it’s coming from you know I have people tell me ask me how do I eradicate you know to Segway, how do I eradicate molds? Guys, don’t even worry about the mold till you figure out why it’s there okay solve the intrusion first. Is it a you know a leaking air conditioning line? is it a roof leak? is the window leak? is it foundational issue? is it a drainage issue? Solve the intrusion issue before you worry about eradicating the mold because otherwise it’s just going to come back. Do you agree Ira?

Ira: I do you know we were recently called in as an expert witness kind of an owner’s rep they had hired a contractor, their windows were put in terribly, they were ordered by the wrong size. I was in a hundred and ninety two unit assets, 80% had mold on all the windows brand new vinyl windows mold inside because they were so freezing that the windows weren’t doing their job that people were putting blankets over their windows and in Chicago, zero Degree winter people were Madison this happened to be but they were freezing. So you have to solve the water intrusion issue, you have to have a type building envelope, caulk applications capping untrimmed so you’re maintenance-free smart water management which is starting at the gutter downspout how that drains down to braid away from the foundation so you don’t have any compromised in the foundation of the building where you’re getting seepage and you know windows and doors are in roots are the most common area that you see in efficiency and compromise

Rod: Yeah you know we just closed on an asset in Dallas, 208 doors and I did a Facebook live video and I’m walking around I’m looking at the downspouts and all the splash blocks were pointed into and draining into the freaking building, brick buildings I’m like, good God. I mean how stupid you know yeah I just never underestimate stupidity but I you know it’s one of the guys if you’ve got a brick building any building for that matter, always check the drainage and the water’s the you know how the water flows. I forgot how you termed it I love that term, from the gutters all the way down away from the house what did you call that?

Ira: Well it’s water management and the grading of the property

Rod: Yeah water management it’s so important and you know you may not have a settlement and cracking issues today but I promise you you don’t deal with it you will

Ira: I would suggest that it would be attractive to your Millennials that the water is harvested in cisterns or rain barrels and then the responsible owner uses that water to water his property for irrigation and flowering that’s a turn-on to a millennial to capture the water because they’re highly sensitized around paperless life and water conservation and they care about the planet

Rod: Yeah sure you know if that is your demographic that’s certainly something to consider for sure. So we’ve talked about the envelope guys that’s the you know the exterior the property siding you know brick, masonry whatever it is, stucco that’s the envelope. We’ve talked about the windows and the roof um let’s talk about some of the systems. You get involved in in system upgrades in you know chillers and boilers and hot water heaters and on and on yes?

Ira: Yes if that is what so when that’s going to happen either design-build through my company with me bringing out my HVAC contractor who is an engineer or the owner is bringing an engineer to the party because there is an efficiency you know the system was old. He bought the asset new that and it’s on the three to five year plan and now you have to get a professional and yes we’re going to design-build, bring construction along with design to talk about what today’s options are because my trades have all the latest experience. The architect ultimately needs to design it because there’s a permit involved you’re changing a whole system within a building and the municipality is going to be involved. So there has to be an engineer in span but the execution of the work and the product suggestion and the methodologies and not just what the HVAC guy has got to do to make his change. Maybe there’s an impact in opening up drywall because you’re going from a boiler to a mini-split system. You’re putting little wall cartridges in each unit and they all have their own condensing lines that have to get outside and down to the ground but that’s a, it’s a higher electric cost it depends on who’s paying the electric bill but if the renter pays the electric bill, they will have more control over heating and cooling by giving them their own system. That’s not a bad way to go depending on if you’re a 20 unit building versus a hundred unit building at that point, your system has to be for the entire building and you know boilers are smart. They are high efficiency. We have certainly changed apartment buildings where all the individual units have mechanical closets and we’re putting in small you know little air handler coolers that are adopted either in facets because there’s the ceiling is finished and they don’t want to open it up or we just saw sit down from the ceiling and we expose them. Today looking at spiral duct

Rod: Let me ask you something here and I’m really glad you went there you know let’s say you find a building that’s got wall air conditioning units hanging out of it 60’s built you know these ugly freaking buildings that have stuff hanging out the outsides of them. Let’s talk about some potential solutions like for example you know I was looking at a property here in Florida that was 60’s built I’m still considering it because it’s close to me. It’s a smaller one it’s only I think thirty doors but I’m considering it but you know it’s got the low pitched roofs on it you know 60s built construction but it’s got window and wall units. What are some solutions there for someone that that looks at one of those assets to make it more modern. I mean I don’t know if you know I’m sure ductwork like you say can sometimes be a challenge. What are some possible solutions to rectify one of these old crappy you know for at least from the exterior looking buildings and certainly you know those cooling systems don’t work nearly as well as a central system, what are some solutions?

Ira: Well so if you’re talking about a building that has through wall sleeves for a living room in a bedroom and that’s the cooling system and then the heating is electric base or boiler fin tube radiator at the base, although in Florida there’s probably not a lot of that but up by us of course there is. I would look at the mini split systems those are you can insell the pass-through you know that’s a match issue. So you do have to take into consideration, you’re eliminating the sleeve. You don’t want to leave the sleeve there abandon the unit and just because the sleeve could be insulated you leave it because the sleeve is ugly. So if they’re going to put in a mini split that’s going to have a condensing line from the unit out on the masonry running down under 1/2 channel so it’s not the black foam ugly, you have to figure out a way to infill that but do get heat and cool and or just cool and you will get rid of that ugly on the roofline. There are a lot of things that can be done architecturally where you can facade or you know build up on the top a gable design that you put a hearty shake panel on the face. So it becomes a gable face and not a gable roof you know you build up a triangle essentially and you sit it on top of the roof and it’s just carpentry worked and roofing and siding

Rod: So you could go inside of it with your ductwork is that what we’re saying here if you’ve got

Ira: No. I’m just saying if you have a flat rope. There’s a way to it

Rod: Okay gotcha so aesthetically to take a flat roof to a pitch. Yeah I was talking more about the hurdles with running the ductwork and that. Yeah here in Florida we have an HVAC unit that’s got a heat strip in it you know because we don’t need to heat that often but you know up north like you say you’ll find buildings these old buildings that have boiler systems that have you know individual AC in them in the walls but you know I always thought you know if you could come up with an easy, there’s no easy what I’m hearing yeah

Ira: Basically two options, you have a closet that you can cannibalize to create a mechanical closet and you put a chiller you know an air handler in there you expose the ducts running in the ceiling you know against the wall ceiling and they’re spiral. You could paint them a pretty color they can be an accent piece if the rest of the vibe of the unit fits in with that exposed spiral duct look. If that doesn’t work, you could build small saucets and have the duct hidden. But you’re not going to want to expose trunkline square sheet metal strapped. Those are ugly. You’re not gonna want to see that in an apartment. You can buy that if it’s like spiral and it works with the overall feel of the unexposed brick wall old wood floors. If you’re like in a downtown district in an old building that looks rip that looks terrific

Rod: Yeah that looks awesome and Millennials love that stuff. Okay well super. We can move past this. So what other types of renovation, repositioning haven’t we covered yet?

Ira: So there’s fitness, there’s pets, yeah there’s excerpt there’s outdoors, there’s packages,

Rod: Let’s talk about outdoors first

Ira: Okay so outdoors are dog parks, not quite simple to build you know literally an enclosure with some fun playground equipment and a smart floor so the waste doesn’t ruin it you know barbecue areas, outdoor kitchens, those are absolutely big times, fire pits, with you know a sitting area. If you have the opportunity to have like flex space outside where you where I can bring my 40th birthday party to my building and rent it, that’s income and an enhancement for the renter. So you’ve got pools, gazebos, if you happen to you know have a major property where you’re a community, you probably have walking trails, if it’s big enough you might have golf carts that get you around. Those are just amenities for the owner to consider when you’re talking about enhancements that are separate differentiators for you as the asset owner because you have a dog park you have a dog washing station. You have a car wash station, you’re different and it doesn’t really cost the owner that much to do that

Rod: Love it love it, dog wash station. That’s when I had not heard of before. I love it car wash station that’s that bed you know if you’ve got it out of the way that makes sense as well you know yeah we’ve done all the other things for sure I love the fire pit idea as well you know we’ve done barbecue areas, dog parks, you know pools of course and gazebos and things of that nature but the fire pit thing. Now I wonder what the liability issue would be for that. Have you seen a lot of those go in?

Ira: Well so in class A high-rise downtown Chicago cardi deck right

Rod: And these are gas fire pits then you’re not talking about wood got it okay got it yeah you see those those are awesome okay

Ira: They’re gorgeous

Rod: Yeah absolutely so you mentioned Fitness. So you know if you’ve got everything you know a clubhouse you, or give some examples of how you’ve seen those implemented is it you have you ever actually brought one out of the ground or do you typically take an existing like we’ve got a unit in our Dallas property that’s bordering the pool that works you’re going to turn it into a fitness facility. We’re going to convert a unit to a fitness facility that’s an option. What are the sorts of things have you seen?

Ira: We’ve done it both ways both out of the ground and refresh and in some cases add where was just a big open leasing center and they didn’t have a fitness center. So fitness center is typically floor outlets. Sso we’re coring or you know channeling the concrete you. We’re ultimately putting a rubber floor down typically, bright colors, wall TVs. The fitness equipment the dumbbells, a cable machine, or benches, that’s what the owner depends what your footprint is for space but I think big enough then one of the things that depending on how big your community is, get an independent teacher for yoga, get an independent teacher for core work, and you provide the you know the mass and the BOSU balls and your team is in there you know communing as a fitness class twice a week and that’s the value add

Rod: You bet love it great idea. Yeah I just touched on something I wanted to expand on and I lost it. Well no, those are great ideas and so what were some of the other ones you touched on I did

Ira: A package room is probably one of them depending on how big your unit you know you’re building because if you have 30 or more units in a building somewhere in the basement or in the lobby depending on what you’re you know with your center entry with two wings on the side depends on what your flex space is but if you can, there are build outs we’ve done where we have put all of the wall drywall flooring electric and low voltage in and then third parties come in that are in the package locker business and they install the lockers and what it does, it allows for FedEx and UPS and the mail service to come to your building put a code in the locker, there’s an automatic email to the residents, the resident comes down picks up their package, and with the online world of how people are consuming through Amazon and the like, it’s a burden for any staff you have it’s your multifamily outside for them to have to babysit the packages

Rod: Oh you know we just saw that you know we were just you know and this is a new phenomenon and that’s actually what I’d forgotten that’s the thing I wanted to get up with you. I just didn’t even, the package room didn’t come to me it was just you know I was thinking you know a place to have deliveries come and that’s really what it is because you know I mean I just got a delivery this morning from Amazon and you know when we were in our Lexington asset, I was in the clubhouse there was a stack of freaking boxes there right there in the club house

Ira: That’s ugly fabulous

Rod: And it’s a pain in the back the staff just like you said. So that’s a must do. You really got it I mean that’s kind of just one of those things you better suck it up and realize that that’s a must do if you want to you know not drive your staff crazy and have you know the leasing office look like hell because like I said we just saw, just funny that you brought that up.

Ira: Well so the student housing community, the market rate apartment community, those are those are definite bonuses the senior market it does not need to be affordable. Affordable market doesn’t need to be different improvements for different asset classes and you know if you have a leasing center that’s got a bunch of boxes piling up and you have you know future residents coming to your place, even rubber-coated wire shelving behind the wall that gets built is better than having the packages sit there around your desks

Rod: We all agree, agreed completely and thank you for that clarification. You’re right. I mean if you’re in a C- property you know they’re not buying they’re not buying as much stuff online Lexington deal I was mentioning is an A property or will be an A property. So you we’re definitely seeing that you’re gonna see that in those. So thank you for that clarification. Anything else that we haven’t touched on here? I mean you’ve had an incredible value Ira. I’m super impressed with your knowledge of this business. Anything else that might add value to my listeners?

Ira: Well so the common areas which are not just the amenities basis but the hallways you know if you’re in a decent sized building and you’re an elevator building you’ve got hallways there are elevator lobbies that can be refreshed. There’s smarter flooring. You can put a bench at the elevator so someone can sit. A mirror is not a bad idea. The lighting that illuminates your corridors is, it’s a perceived you know the lights on and you’re happier. If it’s dark and dingy besides the fact that it can create creak faster for some of your residents if there are you know people in the building who aren’t comfortable with darker hallways, it’s just fresher, lighter, maintenance-free, those are just key key things they’re simple things painting carpet we’re basically talking about. Everyone who’s in your business has a pink and carpet guy because of unit terms make an investment in the common areas. The door hardware, the door peak, the door entry system, it could be literally electronic and you’re just that much smarter depending on the market and the asset class but those are all common area items that are going to help you get more for your building

Rod: Yeah I love it love it. Well guys his website is mosaicconstruction.net and what a wealth of knowledge Ira. I’m so grateful to have you on the show I will likely have you back at some point to maybe dig in on some of this stuff a little more but really appreciate you coming on and I certainly got an education. I know my listeners did as well so thank you my friend

Ira: Rod you are very welcome. I will close just to let people know that we are because we’re experts in multifamily, if you’re taking down a multi-million dollar asset and you’re going to have a multi-million dollar capital budget over five years, we are in the business of helping our clients that we have relationships with, come out and see the asset not ahead of time per se before you take it down and own it but early on so you can have an idea as to what is realistic for budgeting large capital improvements because the ten units out of sixty doesn’t make a lot of sense if you’re owning the building for the next ten years. If you’re trying to flip the building and you want to prove your concept of it increased rents, you can do a few units we’re just there as a consultant to partner as a construction partner with our clients to create value, to understand where there might be compromised. Most outside owners are getting a building inspector to come out so they have a basic understanding. It’s not the same as walking your property with a general contractor with experience in the multifamily sector

Rod: And let me circle back to something you reminded me. Something I want to talk about guys if you purchase an asset and you’re going to make capital and improvements, I can tell you what we look for. We want to see a repayment of the cost of those capital improvements within three years. That is our basic underlying metric. So just keep that in mind when you’re you know deciding if you’re gonna put you know a new appliance package in, are you gonna be able to recapture that money within two to three years? If not you better rethink it. Tthe other thing you just mentioned which I want to draw attention to because you blew over it was you know a lot of times when you’re selling an asset, you will improve a handful of units get those rents up so you can prove to a new owner that there’s still meat left on the bone and that’s what you were just talking about I want to make sure that didn’t fly by any of my listeners. So you’ll improve a few units, you’ll raise the rent, you’ll say hey, this is what’s possible and you’ve got some meat left on the bone and it will make your property sell you know much much faster. Wealth of knowledge brother thank you so much for all your wisdom. It’s really been enjoyable for me and I’m sure it has been for my listeners as well and I will absolutely be working with you and have you look at our next asset my friend

Ira: Thank You Rod. Pleasure and really enjoyed it. We’ll talk down the road

Rod: All right take care buddy see you later

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