Property Value Assessment Guide

Start with current NOI (Net Operating Income) and apply market cap rate to determine value. Compare to similar properties — what rents do renovated comps command? The gap between your current rents and renovated comp rents defines your upside potential.

Total renovation budget should be recoverable through increased rent within your hold period. Rule of thumb: spend no more than 12-18 months of incremental rent increase per unit on renovation. Example: if renovation adds $200/month in rent, budget $2,400-$3,600 per unit.

Renovation increases NOI through higher rents and lower operating costs. A $100/month rent increase across 100 units adds $120,000 annual NOI. At a 6% cap rate, that's $2 million in added property value from the renovation.

Phased renovation (10-20 units at a time) maintains cash flow during construction. Full renovation (entire property at once) completes faster but requires significant capital reserves for vacancy loss during construction.

Match renovation scope to your hold timeline. Planning to sell in 2 years? Focus on cosmetic improvements with immediate rent impact. Holding 10+ years? Invest in structural improvements and premium finishes that reduce long-term maintenance.