ROI of Apartment Renovation
Data-driven analysis of apartment renovation return on investment. Which upgrades generate the highest returns in Houston's rental market.
Data-driven analysis of apartment renovation return on investment. Which upgrades generate the highest returns in Houston's rental market.
Renovation is a capital investment, and like any investment, it should be evaluated on returns. This analysis breaks down the ROI of common apartment renovation strategies in the Houston market.
A $5,000-$10,000 kitchen upgrade that increases rent by $150-$250/month delivers 150-200% ROI over a typical 5-year hold period. Kitchens consistently rank as the highest-ROI renovation in multifamily.
LVP flooring at $2,000-$4,000 per unit generates $50-$100/month in premium rent and reduces turnover repair costs. It's the single best cost-to-value upgrade available.
Common area upgrades are harder to quantify per-unit, but properties with modern amenities see 5-15% higher occupancy rates and 10-20% lower turnover. The compounding effect on NOI is substantial.
Full value-add repositioning — renovating all units and common areas to move from Class C to Class B — typically generates 25-40% rent increases with 2-3 year payback periods. This is the gold standard for multifamily investors.
Formula: (Annual Additional Rent - Annualized Renovation Cost) / Renovation Cost × 100. Factor in reduced vacancy, lower maintenance costs, and higher property valuation for a complete picture.
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