What Does This Kitchen Need?

Hey ,

What does this kitchen need to achieve higher rents?

This is a picture of one of the kitchens at University Courts Living, one of our recent acquisitions

And the answer is: Nothing.

Why? Don’t you need to rehab units for “value-add”?

No, you don’t always need to pour money into properties to get them to earn more. In fact, in the current environment, this point matters more than ever.

#1 Buy assets in the right area.

↳ We’re looking for high demand, low supply, and a low likelihood of new supply of units to come online. Get this right and you have a natural wind blowing in your sails, get it wrong and there’s almost nothing you can do.

↳ Many multifamily investors losing money today got this wrong. Ex. investing in Austin, TX in 2022 was the hottest market in the country; everyone piled in, and they built 33% of Austin’s total apartment supply in 3 years, leading to negative YoY rent growth since. Hot market, yes. Great demographics, yes. But cranes in the air beware.

#2 Simply ask first.

↳ Most sales never get made because the salesman never asked. Don’t think for the customer and watch how they act, not just what they say. If you have #1 right, ask for higher rent at renewal and new lease before you ever spend a dollar. This is the most efficient and highest ROI strategy you can use: ask first.

Example from the picture:

We had two units back out before their lease started this year. Great! This gave us an opportunity to test out higher rents and listen to prospective residents’ actions.

↳ For both units (2Bd), we tried $880/mo plus $75/mo for utilities ($125/mo total increase from prior). They were leased in 2 days.

*Note: Our target for these units next year on new leases is higher and would be meaningfully ahead of schedule, but all we did was ask.

Questions always welcome!

Nate & Steven
Rust Belt Capital, LLC

www.rustbeltcapital.com

_Disclosure:
Rust Belt Capital, LLC is not a Registered Investment Advisor. Investing involves risk, including loss of principal. Past performance does not guarantee or indicate future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. While the data we use from third parties is believed to be reliable, we cannot ensure the accuracy or completeness of data provided by investors or other third parties. Rust Belt Capital, LLC does not provide tax advice and does not represent in any manner that any outcomes described herein will result in any particular tax consequence. This is not an offer to buy or sell any security. Offers to sell, or solicitations of offers to buy, any security can only be made through official offering documents that contain important information about investment objectives, risks, fees, and expenses. Prospective investors should consult with a tax, investment, or legal adviser before making any investment decision. Distributions or profitable investments cannot and are not guaranteed. Not intended to be tax advice and should not be solely relied upon to make an investment decision.