Quote:
Originally Posted by Alex from Montreal
I know there are some slumlords out there but landlords need to spend some money to get quality tenants;and not too many tenants here like carpet. They all want wood floor in the bedroom and living room and ceramic tiles (no vinyl tiles) in the kitchen and bathroom.
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Since you are in Montreal, I can tell you from experiences that my friends have (one of them owns a number of mid-size (50-100 unit) buildings in different markets.
Their goal is to be slightly better than their market (the building around them) and to charge more than the others. But it isn't just in the apartments themselves, but also in things like the entrance ways, hallways, parking areas, etc. If you bring the overall standard of the building up above the others, you can charge more. As a bonus, the Regie will allow you to pass many of those expenses on as rent increases in the next year, which again helps you make your property work.
If you can charge more, you can continue to maintain and improve the property, and have the money to improve the apartment.
If you have people asking for wood floors, ceramic, etc but want to pay low dollars for it, don't do it. Go check comparable units around your area, check to see what they are charging, what condition the units are in, etc, and be better than that. Don't overshoot your market, or you will never get return.
Also, remember that if you make major improvements to a few units, it is likely that your longer term tennants will start to bother you to do the same, and many of those costs cannot be passed on to them as easily. Careful not to over improve and put yourself in a hole.
Also, if you paid $75,000 per door (price per unit) and the market is $80,000, try never to spend half of that difference in improvements, otherwise all your equity is lost, at least in the short run. Always keep your investments at or below the margin.
Good luck.