Apartment & Multifamily Repairs & Renovations

Cash flow is king in apartment & multifamily project investment

. A major component of expense of operation are repairs and renovation. The condition and age of equipment and structures will obviously greatly influence these costs, and there's not a lot that can be done about this, unless renovation can improve the situation, and holding the property will recoup the cost in increased rents or lower vacancy rates in the future.

But, the costs of repair and renovation are also greatly influenced by management choices of material and service contractors. If in-house maintenance is on salary, it's still a cost, and most of these considerations will still apply.

Repair Contractor Selection

Low bid is sometimes the way to go in selecting a repair service, but only if the specifications of the work are clearly set out in detail in writing. As this is rarely the case, especially when there is a lot of equipment, heating, air conditioning, refrigerators, washers, dryers, etc., it's best to select a repair service with cost somewhere on the list, but not at the top. Reasons & considerations include:

Repair companies will respond to their best paying clients first. If tenant retention is important, delay can cost more than a higher rate for repairs.

Along the same lines, either the project should stock spare parts, or the contractor should make that investment. Since profits on their side come from markup of parts, it's best to let them do it, and to pay enough to make sure that parts are on the truck.

At the very least, response times should be set out in an agreement, as it helps management to give tenants an idea of when their system or appliance will be functioning again.

Warranties and callback procedures and responsibility should be discussed. Records of service by system or appliance need to be detailed and repair contractors called to task for multiple recalls for a repair.

Renovation or Larger Job Contractors

When the job becomes something more extensive, such as roof replacement, or major interior or exterior renovation, the process becomes more formal. In this case, specifications clearly defining the scope of work and the quality of the completed work need to be in place, before price negotiations. Again, care should be taken to make a selection that is based on firm agreements as to the result and the time line to completion, not just the cost.

Repairs and renovation for apartment & multifamily projects are a large piece of the expense and cash flow, so planning and close control is critical.

by: karenhanover

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