Rehabbing while tenanted

I know the ideal time for doing major renovations on a unit is when it is vacant. Here is my situation

I have 3 1-bedroom units. When I took over the property there was an apartment which was renting for only $300 while market rents are $450 pushing $500 on nicer models. Since the apartment was in such a state and the previous owners note was so small, and the tenants paid rent on time monthly I guess he wasn’t bothered.

When I took over the buildling I gradually over the course of 2 months raised the rents to $450. I desperately want to do the place up nice and bring it to better standards (raising rent later, maybe getting other tenants in as current ones are month-to-month)

What are peoples experience if any with doing renovations while tenants are still living apartment and how did you handle it? I guess you could ask them to stay with relatives for a few days…other ideas?

Why not do them as the turn over? Why do they need to be done now?

To be honest I want to raise the rent and improve the building at the same time. I feel there can be no complaint with the rental increase if the apartment has been worked on a bit now from the current tenants who are quite good

I doubt you’ll be able to do much rehab while its rented. Maybe some painting or something like that but ripping out the kitchen or bathroom if even for a few days would make the apartment unlivable and probably illegal to occupy. You may be able to get them to live with a friend for a few days but you better have your crews ready to go and get it done FAST. Also, be prepared to compensate them for their troubles. They signed on for 31 days of occupancy each month, if you take away 4 of those days you are short changing them…keep that in mind.

I always rehab after tenant move-out, but had it done tenanted on a few occasions.

There was a bathroom in on of the units where the “old fashion” pan leaked, the shower stall was tiled, the same tiles as all the walls, “sea sick blue”. Since the tiles were an outdated design as well, some pieces broken, going back to 1957, we decided that rather than just fixing the shower pan, we’ll update the entire bathroom during the rehab.

We were thinking of doing at move-out, but if we could do it while “tenanted”, we’ll be ahead of the game when we re-rent.

Because it was not a big leak, this tenant, a single older man arranged to take a vacation to a relative, out in California, for the duration of the rehab, about two months later. So it was important to make sure the contractor was available on the exact week my tenant was gone. He left on a Sunday, work started Monday, and bathroom was finished on a Wednesday night, with cleaning the following day, and he had a new bathroom when he came back, the following Sunday, with a few days to spare.

On another occasion, a tenant of five years gave me what he called “good news” that he found a new apartment to move into in the neighborhood, giving me a 30 days notice. Because I knew the delivery of kitchen cabinets is the key to these rehabs, it could take up to a few weeks, I immediately designed a new kitchen, and ordered the cabinets, figuring in the worst case, I’ll store them in my garage till his move-out, if the timing is off.

Boy, was it off.

Unfortuantely, things never turn out as expected sometimes, and since the apartment he was moving to is a coop, he was turned down by the board, and told me the “bad news” while the cabinets were on the way, and I was not able to cancel the order.

So we told him the “bad news” that we’re stuck with cabinets, and we’ll have to do the rehab while he’s there. The project was supposed to take tops, three weeks, making a dining room out of one end of a old style “eat in” kitchen, and building a brand new kitchen on the other end, with brand new appliances, and adding a dishwasher.

On thing about some of these rehabs is underestimating the difficultoes, and one part of the project was to take down a wall to it open it up, and make the dining room. We didn’t realize steam pipes in it had to be moved. i had to hire a professional as I didn’t want unlicensed guys mucking around with steam pipes.

The tenant put up with the rehab, that eventually took over five weeks, eating out, eating at a relatives place, till the job was finished, He put up with it since it was a situation he created, but it’s not an experience I want to repeat, nor put a tenant through again.

When you do these things, you should have some repor with the tenant, else the landlord or the contractor might be accused of theft of damage or property or worst. In the above instances, we told the tenants to take their valuables.

A next door landlord did the same, replacing a bathroom. I have read often that if a tenant lost his job, fell behind on the rent, a three day notice is posted immediately followed by an eviction. In this case, the owner not only empathized with the tenant, but felt bad, waived the rent for the first month, and told the tenant to come back and make arrangements the next month if he needed more time.

As luck would have it, the tenant found work in weeks, and stayed on for quite a few years after. He explained later that an eviction can take months here in NYC, so he’ll lose anyway. Why not work with the tenant instead of thinking the worst case??

In this case, it worked like a charm.

As I knew the landlord, the bathroom contractor, and this next store tenant, I was in and out of the place watching the progress of this rehab. The tenant told me many times that he’s so thankful that this landlord gave him such a break, that he’ll walk to the “ends of the earth” for him. During this one week rehab, the tenant showered upstairs in the landlord’s apartment, and shared meals with him.

Again, it’s possible because of the repor, but I wouldn’t undertake such a project with someone I don’t know well.

If they are in the unit it does not need to be rehabbed. What I would do is raise the rent to where you want it to be. If they pay it you get to keep all the money. If they move out you can rehab it then.

in the past, if they were way under market, I would bring it up 50-75% of the way.; if they move out, rehab starts right away, if not, I just waited. unless there is something really wrong that will damage the property, don’t be in too big a hurry drop money on a rehab whne you have cash playing client in place.

I like this idea. I may utilize it myself.