Case study: Multi-Family Residential Value-Add Makeover

Industry: Real Estate

Client: Real Estate Owner/Operator

Consulting Service: Garden Style Value-Add Strategy & Execution

Our client acquired a Class B apartment community located in Bowie, Maryland, that was 20 years old. When acquired, the property was in need of physical improvements, with most interior finishes being original from the mid 1990’s.  The strategy to improve the property was a three-pronged strategy; update the physical asset, upgrade the management team and have them focused on delivering world class service, and educate and focus the team on managing operating expenses. 

Physical Improvements: Cleaning up the exterior without breaking the bank was critical. The exterior improvements including new roofs and gutters and putting in place a standard preventive and proactive maintenance program for railings and common hall areas. A remake of the Club House and amenity spaces was also undertaken. A modest interior renovation assisted in the transformation of the property through refinishing cabinets, new luxury vinyl tile and flooring, lighting and fixtures, and adding washer and dryer hookups.  

Management Team Upgrade: It is critical to understand the importance of respecting and valuing your residents. This is not an apartment to them, it is their home, and when they feel respected and appreciated, they will take care of it and help build a vibrant community. This starts with putting in place a Team of individuals that manage the property that value and carry out a high level of service. Creating a plan that compensates them based upon the desired behaviors was critical. This includes programs for Resident Satisfaction, New Leasing, Renewals, and meeting and exceeding Financial Performance. 

Operating Expense Management: The unit renovations assisted in improving efficiencies in electrical and water usage, and the Maintenance Team rebid each of their vendor contracts annually. 

The Results: The initiatives began within 90 days of the purchase of the property, and the full unit renovations were completed within 18 months. While the rental market in the area increased on average 3.0% annually, this community grew at an annual rate of 6.8% over a five-year period. A comparative property with similar timeline and renovation spend, increased rents from $1,200 per month to $1,391 over a five-year period. The rents at this community increased from $1,200 to $1,667 over the same five-year period. Resident satisfaction improved from 2.9 out of 5.0 in the year prior to acquisition to 4.3 out of 5.0 in year five. This was done through creating a community that residents were proud to call home and was beneficial for everyone. Renewals increased from 39% annually the year prior to acquisition to 67% in years three through five of ownership. Operating Expenses were reduced by 2.25% annually over a five-year period. This targeted value add program gave a lift to NOI, from 35% to 62%, leading to a 58% increase in asset valuation.  

Client Feedback

"Partnering with JD Thomas Consulting was a turning point for our portfolio. Their value-add strategy didn’t just improve operations—it transformed the property’s performance. We saw a significant lift in NOI and a corresponding increase in asset value within months. The results spoke for themselves—and so did our investors."
                                                         — Owner / Asset Manager, Multifamily Investment Group

This case study highlights the effectiveness of tailored, three-pronged strategy to improve the physical asset, deliver world class service, and educate and focus the team on managing operating expenses. When all these were implemented, the value-add to the asset was incremental.