Key Takeaways from our Webinar: The Importance of Construction in Multifamily Investing

June 26, 2020 – Business

multifamily investments
Make sure you’re always up to date! follow us on facebookand linkedin

 

 

In our latest Webinar, we shared insights on how construction is a critical part of delivering great returns for investors.  Below are some of the key points covered:

 

Construction is a key element to a “value add” strategy

    • Preliminary planning for improvements and a construction budget should be included from the very beginning of the underwriting process
    • Effective planning and execution of construction help increase returns in three ways:
      • Increasing operating income through elevated rents
      • Lowering maintenance and operating costs
      • Increasing overall appreciation of the property

 

It is key to invest with partners who have extensive construction experience.

    • Having relationships with contractors and suppliers is important in getting consistent, well-priced, and quality work and building a partnership for future business.
    • Construction project management is essential in sticking to schedules and budgets because if things are not going as planned, it can adversely affect your returns.
    • By maintaining construction relationships, you can get favorable pricing which allows you to acquire deals that others see as not workable.

 

Lenders will require certain improvements as part of the financing of a deal.

They will want to see a broken-out budget of renovation projects to increase the property’s value, so having a strong knowledge of construction and project management is paramount to securing the largest piece of the capital stack.

    • Also, certain projects may qualify you for a “Green” loan, which can come with a lower interest rate. These projects often include measures to help the environment and make the property more efficient, such as low-flow toilets, updated electrical outlets, and updated efficient faucets and showerheads.

 

Interior and Exterior project examples:

Interior

Before                                                                                            After

 

 

 

Exterior

Before                                                                                        After

                                                 

 

By the Numbers

    • In our most recent property rehab, unit turnovers paid for themselves within 4-5 years with rent increases, all while increasing the property’s overall income. Cost-efficient construction helps drive the Net Operating Income (NOI) of a property higher, which augments the overall valuation.

 

As always, if you’d like to discuss any of these points further,
you can reach out to us at info@yankee-capital.com

 

OUR WEBINAR SERIES WILL CONTINUE!

 

Please check back for updates and follow us on facebookand linkedin

 

LEARN HOW TO BECOME AN INVESTOR WITH US

We welcome inquiries from domestic accredited investors as well as international investors seeking multifamily investment opportunities.

Schedule a call

Related articles

investing in real estate

The Hunt for Yield

September 14, 2021

Interest rates are low, inflation is rearing its head and equity markets are at all-time highs.  This puts many investors at a crossroads and in need of a strategy that can generate income, hedge against inflation, and is largely secular to the equity markets, and our recommendation would be to look at investing in commercial […]

Read more »

Top 10

The Top 10 Reasons to Invest in Multifamily Real Estate

August 11, 2021

We all know we should be investing in real estate, so what is holding you back? Our team has put together the “Top 10 Reasons to Invest in Multifamily” as a guide for you.     We highlight some of the many benefits that come with investing in multifamily real estate gathered from our years […]

Read more »