Dana on October 22, 2020


There are two types of unit interior renovations – unoccupied and tenant-occupied.  

Unoccupied renovations are very much what it sounds like in that renovations occur when the unit is not inhabited.  This allows for the contractors to remodel the unit freely, without any constraints. 

Tenant-occupied renovations are when the contractors complete remodeling while the tenant resides in the unit.


Why would an asset owner choose to go with tenant-occupied renovations?

We have worked with quite a few clients that either need or want to keep the asset’s occupancy rates at a certain percentage.  This could be simply for cash flow purposes or as a requirement per the lender.  

When units are taken offline to renovate, vacancy rates go up.  Some construction loans specifically require occupancy rates to maintain at a certain percentage.

Does tenant-occupied renovations make sense?

There are three situations where it makes sense to go with tenant-occupied renovations.  

  1. The tenants intend to stay long-term and will benefit from the upgrade.  Upgrading also may be necessary due to the current market.  By renovating now, the owner may be securing future years of rental from current tenants. 
  2. The owner is looking to enforce a future rent increase.  
  3. The asset is competing with new inventory in the marketplace.  By updating the interiors, and stabilizing the rents at a comparable (or possibly lower) price point than the new builds, current tenants may stay longer and may attract new tenants in the future. 

Each situation will hopefully end in creating long-term tenant satisfaction and investor return. 


What steps should be taken prior to renovating?

Before actually performing the tenant-occupied interior renovations, it is recommended to take the following steps:

  • Communication between the owner and tenants is essential to reduce the likelihood of any confusion pertaining to the upcoming renovations.  
  • Owners should schedule a meeting with the tenants to detail all aspects of the renovation that will distinctly affect them.   
  • Explain the extent of the work.  Describe what renovations will take place and what the tenants will be required to do to safeguard their furnishings and belongings.  
  • Detail when the project is estimated to begin and end.
  • Provide sufficient notice so the tenants can make any personal schedule changes as needed
  • Take the necessary steps to protect the tenant’s health as well as personal possessions.
  • Listen to and resolve any tenant concerns throughout the process.  Be as available as you can be.
  • Stay involved with the project so that tenants are not the ones managing the contractors at the property.
  • Require completion with minimal disruption to the daily business of the tenants.

Adivo successfully completed a White Glove Service renovation program at Vista Ventana in El Paso, Texas.  This tenant-occupied interior renovation consisted of replacing the countertop, sink, and faucets in both the kitchen and bathrooms, as well as new tile backsplash installation in the kitchen.  Both the asset owner and tenants were extremely pleased with the process and outcome!


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