Property Makeover: High-end Renovations Worth it to Renters
By Wendy Annunziata
The website for Urban Place Apartments in Tampa features a pop-up screen that flashes the following message to prospective tenants: “Washer & Dryer now available in all unit types! Ask about our Platinum Upgrades with stainless steel, granite counters, updated cabinets and more!”
That flashing message is more than just a marketing tool; it sums up — in 23 words — the two interior renovation projects that offer the most bang for the buck when updating older apartments, experts said.
In a nutshell: Today’s renters want their own laundry closets and high-end kitchens, even if that means paying more in rent.
As for the exterior upgrade that makes the most economic sense, experts suggested that if your community already has a pool and a fitness center — which are considered standard these days in Florida — adding a dog park is the best way to help you compete with newer apartment communities.
Here’s a look at those upgrades and how they can pay off.
“First and foremost, what we’re seeing is that people want laundry rooms” inside their apartments, said Danielle Angel, operations director at C&N Renovation, based in Dade City. “Boy, is that popular.”
As recently as the 1990s, community laundry rooms shared by all of the residents were the norm. Not so for today’s renters — especially the younger ones.
“The millennials want their own washer and dryer,” said Jose More, vice president of Newport Property Construction, based in Coral Gables. “All of the new product being built now has a washer and dryer in every apartment, and that’s your competition.”
But adding laundry appliances to an older apartment can be tricky.
“Sometimes you’ve got to be creative to find a space,” More said.
Often that means converting a kitchen pantry or a hall closet into a laundry area, although in Florida, another option is equally popular: adding a laundry closet to a patio or balcony.
“Because of our warmer weather, we can put them out there,” said Tyler Davidson, regional director of construction at Monument Real Estate Services, which is based in Miami.
The cost to add a washer and a dryer — including plumbing, electrical components and the appliances themselves, not to mention the conversion or construction of a closet or other space, if necessary — can run from about $2,500 to $5,000 per apartment, several contractors said. So it’s not an inexpensive upgrade — but it’s one that will typically pay for itself quickly, allowing communities to bump up rents by about $50 to $75 per apartment, depending on the market, several contractors and property managers said. That can allow owners to recoup their investment in as little as three years.
As with most other renovation projects, the work is usually done one apartment at a time, after one resident moves out and before the next one moves in, contractors said.
Tim Butler, president of Branch Reconstruction, based in Tampa, said adding a laundry area is one of his top recommendations when doing interior renovations.
“That’s a huge upgrade,” said Butler. “At some apartment complexes, maybe 40 percent of the units don’t have them [washers and dryers], but 60 percent of the units do, and … those are the units the residents want.”
The most expensive room in an apartment to upgrade is the kitchen because of the built-in elements, such as cabinets and counters, as well as the plumbing and the appliances. Adding to the cost of renovations is that fact that many residents want a high-end kitchen with granite countertops and stainless-steel appliances — the type of kitchen they see on shows such as House Hunters or Property Brothers on HGTV, several contractors said.
“Every kitchen we’re doing right now, we’re adding granite” to replace Formica or other laminate countertops, said Angel of C&N Renovation. “Residents want that granite.” Although granite countertops can cost about $1,000 more than laminate ones, the investment is worth it, both for looks and for durability, she said.
David Tackett, owner of Sunshine State Construction Group in Sanford, agreed that switching from laminate to granite countertops is often the first step to a more appealing kitchen.
“They say the kitchen is the heart of the home, so the look matters,” he said. “Granite looks better and holds up against the wear and tear of tenants.”
Less expensive kitchen upgrades — costing a few hundred dollars or less — include adding a tile backsplash or replacing brass or chrome plumbing fixtures with brushed nickel fixtures.
“Brushed nickel looks more modern these days,” said More of Newport Property Construction.
Pulling out all the stops to put in a high-end, HGTV-style kitchen is worth the investment, several contractors and property managers said. Costs can vary depending on the size of the kitchen, plumbing upgrades and the types of appliances and countertops installed, but Davidson of Monument Real Estate Services said that, in general, gutting a kitchen and putting in new cabinets, granite countertops and stainless-steel appliances runs about $6,000 to $7,000 per apartment.
The return on investment for a renovation like that can be substantial, with rent increases ranging from about $100 to $200 a month per apartment, depending on variables such as the location of the community, several contractors said. Owners can recoup their initial investment in less than three years if a community is at the high end of the rent scale.
Several contractors said adding a dog park is their top recommendation for improving an apartment community’s appeal while spending a minimal amount of money.
“First and foremost, [add] a dog park if your property allows animals,” said Butler of Branch Reconstruction. “It’s not expensive, … and it’s a great marketing tool. And they [property managers] like it, too, because there’s less dog poop … on the rest of the property.”
For a small, simple park on an existing grassy area, the cost would start at about $7,500 for fencing, a gate, a few benches and poop stations, Butler said. Other amenities — drinking fountains, spigots for dog-washing stations and agility equipment such as tunnels, ramps, and obstacle courses — can increase the cost by thousands of dollars.
One of the latest trends is to replace a community’s tennis court with a dog park.
“Tennis courts are wasted space,” said More of Newport Property Construction. “No one plays tennis anymore.”
Davidson of Monument Real Estate Services said replacing tennis courts with dog parks is a smart move for many reasons.
“How many of your residents play tennis? Many more of them have dogs,” he said. Plus, a dog park draws in more residents with pets, who typically pay up-front fees of $300 or more, plus an extra $10 to $50 a month in rent, depending on the type and size of their pets, Davidson said.
Having to tear up a tennis court’s concrete and put in an irrigation system and sod can bump up the price of a dog park to $25,000 or more, but the appeal to dog lovers is priceless, several contractors and property managers said.
The new dog park at Polo Glen Apartments in Rockledge — which replaced a tennis court — is a big hit, said property manager Barbara Budz.
“It absolutely gets more use than the tennis court,” she said. “I’ve been in this business for 22 years, and I can count on both hands the number of times I’ve seen residents use a tennis court [at an apartment community]. The dog park is definitely used. The residents and the dogs love it.”
As for whether it’s better to start with interior or exterior renovations, many experts suggested zeroing in on the apartment interiors first.
By doing so, “you’re going to get a big return on your investment right away,” said More of Newport Property Construction. “Let’s say you paint the outside [of your apartment buildings], but you haven’t done the inside. Well, you’re not going to get any more in rent because you’ve still got a 1990s apartment” that looks dated.
But others suggested working from the outside in.
Lucas McCurdy, senior vice president of business relations for Coastal Reconstruction Group, based in the Orlando area, said sprucing up a community’s entrance area and signs, as well as the clubhouse, is the key to attracting new tenants.
“That’s what people will see first. That’s what will get their attention,” McCurdy said. “Once you’ve got that and they come in [to the leasing office], you can let them know” about any renovations to the apartment interiors
Property owners and contractors also recommended doing interior renovations piecemeal, as tenants move out.
That’s how renovations are being done at Urban Place in Tampa. So far, about 20 of the 150 apartments have been updated this year by C&N Renovation as tenants have moved out, said property manager Ivis Gonzalez. It takes about five to 10 business days to renovate each apartment, Gonzalez said. The apartments, originally built in 1974, are getting new kitchens, bathrooms and laundry units, with the renovation cost starting at about $10,000 for the one-bedroom model.
Gonzalez said most prospective tenants who tour the community choose an upgraded apartment over a standard, or unrenovated, one — even though the rent is $170 to $180 more per month.
“They absolutely love them,” she said.