Planning a value-add renovation of a small multifamily rental

Start with the building, then the market

Fix what the building needs before you add what renters might pay for. Have the roof, structure, plumbing, electrical and heating checked, and put safety and habitability items first.

Then look at the market. Compare your current rents with listings for similar renovated units nearby and with HUD's Fair Market Rents, which estimate the 40th percentile gross rent paid by recent movers into standard quality units. Decide which upgrades renters in that market value enough to support the rent you need, and which units to do first, for example the ones whose leases end soonest.

Write the scope and get permits

• Scope by unit and area. List each unit and common area, the work in each and the finish level, so bids compare line by line.
• Ask about permits early. Before you sign contracts, ask your city or county building department which items need permits and inspections, and how long reviews take.
• Check demolition notices. In California, if you apply for a permit to demolish a unit, you must tell current tenants before you apply and tell prospective tenants in writing before signing a lease or taking an application fee (Cal. Civ. Code § 1940.6(a), (b)).
• Keep the paper trail. File permits, inspection sign-offs and contracts with the property records.

Budget with a contingency

Build the budget from the scope, then add what is easy to forget:

• Permits, design and inspection fees.
• Lost rent while units are empty.
• Relocation payments, where your state or city requires them.
• A contingency line for problems found once walls are open. Set the amount from the building's age and condition and from your own past projects.

Ask contractors to separate repairs from improvements on their invoices. The tax treatment differs, and itemized bills make the split possible.

Lead-safe work in buildings from before 1978

EPA's Renovation, Repair and Painting rule applies to paid work that disturbs paint in housing built before 1978. EPA says rent counts as compensation, so work by landlords and their employees is covered. Key requirements from EPA's March 2026 compliance guide:

• Certification. The firm must be certified, and workers must be trained as or by a certified renovator in lead-safe work practices.
• Pamphlet before work. Give the Renovate Right pamphlet to the owner and occupants before the work starts. Delivered in person, it can be given any time before work begins, as long as work starts within 60 days. Mailed, it must go at least 7 days before work, with a certificate of mailing.
• Common areas. For work in common areas, either give renovation notices to tenants or post informational signs.
• Small jobs. Minor repair and maintenance that disturbs 6 square feet or less of paint per room inside, or 20 square feet or less outside, is exempt, but window replacement and demolition never are. Jobs in the same room within 30 days count as one job.

States can set stricter rules. Maine, for example, requires 30 days' notice, a sign on exterior entry doors and certified mail to every unit before work that may disturb lead-based paint in a rental building built before 1978 (14 M.R.S. § 6030-B(3)). When you lease the renovated units, the federal disclosure rule still applies: disclose known lead-based paint and hazards, give the Protect Your Family From Lead in Your Home pamphlet and include a lead warning statement in the lease.

Occupied units: notice, relocation and rent rules

Renovating around current renters, or ending tenancies to renovate, is tightly regulated in some places. Verified examples:

• Oregon: after the first year, you may end a month-to-month tenancy for repairs that make the unit unsafe or unfit to live in only with at least 90 days' written notice stating the reason (ORS 90.427), and you must pay one month's rent with the notice unless you have an ownership interest in four or fewer dwelling units (ORS 90.427(6)).
• Washington: demolition, substantial rehabilitation or a change of use needs at least 120 days' notice (RCW 59.18.650(2)(d), (e), (f), (m)) (RCW 59.18.200(2)(c)), and local governments may require relocation assistance for low-income tenants (RCW 59.18.440).
• District of Columbia: approved renovations carry a 120-day notice to vacate, with relocation help and limits on re-renting in some cases (D.C. Code § 42-3505.01(d), (f), (i)).
• California: where the just cause rules apply, a no-fault termination requires relocation help equal to one month's rent or a written waiver of the final month's rent (Cal. Civ. Code § 1946.2(d)).

Rent increases after the work are still subject to any statewide cap, such as California's (Cal. Civ. Code § 1947.12(a)). Check your state and city before you schedule the first unit.

Measure the results

Record the baseline for each unit before work starts, then compare after it settles:

• Rent per unit and days vacant between renters.
• Operating expenses per unit, including repairs and utilities.
• Net operating income for the building: income less operating expenses, before debt service.
• Work orders per unit, as a sign of whether the new finishes hold up.
• Actual cost against budget, including how much contingency you used.

Separate what the renovation did from what the market did. If rents for unrenovated units nearby rose too, only the difference is fairly credited to the work.

This guide is general information, not legal advice. Rules change and vary by state and city, so confirm how they apply to your situation with a local attorney.

How Rentari helps

Rentari's work orders to vendors and vendor records keep each contractor's jobs in one place, and messaging with renters keeps a dated record of notices and schedules. In accounting, split transactions separate repairs from improvements on one bill, and fixed assets with depreciation entries hold the costs you capitalize.

Sources and further reading

• EPA Small Entity Compliance Guide to Renovate Right (EPA-740-K-26-003, March 2026)
• EPA: Lead Renovation, Repair and Painting Program rules
• EPA: Lead-based paint disclosure rule (Section 1018 of Title X)
• HUD: Fair Market Rents for fiscal year 2027, Federal Register notice
• Oregon Revised Statutes chapter 90 (ORS 90.427)
• Maine Revised Statutes title 14, 6030-B: lead notice before renovation

Common questions