Financial Advantage to Renters
This table uses data from forrent.com and moving.tips.
Every year approximately half of all renters move out of their current apartment. The average cost of moving is approximated as $1,500.00. This works out to an average moving cost of $ 62.50 per month. As well renters spend around $8,000.00 to furnish an apartment. Assuming financing at 5% over an 8 year period at which point furniture is replaced ( depreciates to zero ) works out to a cost of $83.33 per month. Assuming also that a convenience or coolness premium of $50.00 per month is justifiable, builtin furniture commands a monthly premium of $195.83. At an interest rate of 5%, an apartment investor could borrow up $ 47,000.00 on an all builtins rehab loan and just break even.
A $23,000.00 rehab would net $ 100.00 per month to the bottom line. At a 5 cap on a 300 unit apartment this boosts the valuation by $7,200,000.00. Note that this analysis does not cover additional AirBnB revenue made possible by all builtins. That analysis is covred in a seperate
