During the Great Recession of 2008, many rental units emptied out, as they have during the COVID-19 crisis. And then, as now, we advised owners to make improvements while the units sat empty. Those that followed that advice came out ahead in the long-term.
It wasn’t becuase these renovated properties were able to command greater rents – in fact, they sometimes rented for the same or even less than they had before the renovation.
So why would we recommend taking on the expenses of renovation, if those properties wouldn’t show greater returns?
It’s counterintuitive, but just because we couldn’t immediately raise the rent on the revamped units doesn’t mean it wasn’t worth it. In every case, it was:
- Renovated units were more attractive and returned to steady rental much sooner than properties that weren’t improved;
- As these fixed-up flats and apartments turned over in the following year or two, they returned to the market with higher rents than their shabby counterparts;
- Even after a couple of years, units with the major flaws already fixed only needed a good cleaning or a fresh coat of paint before they were ready to go back on the market, and as noted, were vacant for much shorter periods of time.
So, in the end, owners who chose not to make an investment in renovations during a period of increasing vacancies and falling rents, as we have now, found themselves with units that stayed empty longer, and then could not command full market rate even when they finally did find tenants. Eventually, those units needed to be renovated anyway – only this time the renovations happened during a period of high demand and rising rents so owners missed out in capturing some of those positive dynamics.
Keep in mind, we’re not talking about down-to-the-studs or anything like that. Just some fresh paint, new carpeting, or decent new appliances will make a big difference in helping you maximize asking rent.
Strategic renovation timing is one Gaetani’s specialties as the premier property management company in San Francisco. For expert information about taking advantage of the current market conditions to make sure you’re getting the best return on your investment in your property — please contact us.