Managing Capex ROI in Value-Add Plays

Among the new sources of revenue mentioned for value-added properties are utility billing, pet deposits and laundry.

HUNTINGTON BEACH, CA—Updating curb appeal first before renovating units is a smart way to add value to older multifamily properties without spending unnecessarily, said panelists at the IMN Multifamily Forum here last week. During the panel session “Opportunistic/Value-Added Plays—Redevelopment & Bringing Older/Vintage Properties Up to Date,” speakers discussed the best use of funds for these properties and the smartest moves for investors to make, as well as the pitfalls to avoid.

Moderator Merrick Lackner co-founder of Rently Keyless, asked the panelists how they manage capex ROI. Marc Venegas, president of Coldwater Partners, said the properties his firm buys have been under the same ownership for a long time and need paint and other upgrades after purchase. “We focus on curb appeal—those are the dollars spent up front—then unit appeal.” He said that 20% ROI is typical on value-added properties with a $100 premium.