Renovating the Renting Market
If you live in one of America’s growing cities, you may have noticed cranes on the horizon as new luxury apartment communities are built. Today, almost all new multifamily construction is for class-A apartments, which are expensive, luxury apartments that are often built in downtown areas and charge high rents. These new, class-A apartments answer demand from wealthy renters. However, workforce renters are still left without affordable renting options. Their only real option is to look at existing apartments. But the last major apartment building booms in the U.S. were in the 1970s and 1980s, so a lot of existing apartments are between 25 and 40 years old. Many of these apartments are in good locations in the suburbs, but they need to be updated and renovated.
The solution to the affordability crisis for middle-income people in American cities is to renovate these apartments. Smart multifamily investors should find undervalued apartment communities near growing cities and buy them. They should renovate them inside and out, put in new amenities, update the fixtures and turn them into desirable communities. These renovations will make the apartments feel new, but they’re much more affordable than building new construction. The resulting rents in these communities can be significantly lower than in new developments. In other words, through targeted buying and renovation, smart real estate investors can create the updated, high-quality, affordable apartments that the middle class needs. (National Association of Realtors)