When to start lease-up on a rehabbed building?

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Here’s a question we wrestle with all the time: When should lease-up begin?

You’d think this would have an easy answer: When construction is done. But you’d be wrong.

Usually, buildings are “showable” (eg look pretty close to complete) 2-4 weeks before the construction is actually done.

And, after carrying the building with no cashflow for nine months, you’re desperate to begin signing leases and getting revenue in the door.

So, you typically begin the lease up before construction is totally done.

But that leads to other complications, like “What happens when you find a tenant who wants to move in immediately?” and “What if the city inspector needs you to make material changes to the building after a tenant has signed a lease?” and “What if there are construction defects that affect the tenant after she moves in?”.

Each of these kinds of issues can be solved with patience, savvy and diplomacy (and sometimes a bit of cash to grease the wheels). So that’s what our management company has learned to do.

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