On the other hand, Rochester, N.Y.–based REIT Home Properties, which did 3,000 rehabs last year, takes a much more scalable approach. The company chooses to renovate the interiors of its units on turns rather than emptying the entire property out. If the market picks up, the company can ramp up the process. “We’ve always had a holistic approach,” says Keith Knight, vice president of capital improvements and national accounts for Home. “We upgrade from the curb to the common areas to the interior areas. You raise the overall curb appeal, and then you get into the interior to the living space.”
Home Properties Bryn Mawr
When Keith Knight, vice president of capital improvements and national accounts for Rochester, N.Y.–based REIT Home Properties pulled into the parking lot at Home Properties Bryn Mawr, which is near the campus of Villanova University in Philadelphia, the first thing he noticed were the cars. The students living at the property were driving Land Rovers, BMWs, and Audis. Upon seeing this, Knight decided the property was ripe for a rehab.
“We think we have attracted a lot more Villanova students with this product,” Knight says. “We pushed [renovations at Bryn Mawr] last year because we had so much success. In a down market, we were insulated because they were students.”
Location: Bryn Mawr, Pa.
Company: Home Properties
Number of units: 120
Amount invested per unit: $20,000
Rent increase per unit: $240
Pre-rehab occupancy: 91.5%
Post-rehab occupancy: 95.6%
Scope of rehab: Upgraded floors, bath fixtures, lighting, kitchen hardware, and cabinets, while also adding new ceramic tile and stainless steel appliances
Simpson is also versatile. Before the downturn, Simpson was planning a $30,000-per-unit rehab in Atlanta that would knock down walls and reconfigure unit types. The markets went bad, and it canned that project. Now, Simpson is taking a more conservative approach at a Denver property where the exterior is OK, but the interior is aging. So the company is looking at redoing the interior for $15,000 per unit.
