How to divide a property to increase its profitability?
In this article, you will discover how to transform a 4-room apartment into three studios to increase rental profitability by more than 50%. The new one has the advantage of being able to move the partitions and arrange the space without having to break the existing one which represents substantial savings.
The rental profitability of studios is always greater than a 4-room apartment, but new studios are often expensive with a price per square meter much higher than apartments with a larger area. We are therefore literally going to transform a 4-room apartment of 76 m² into three studios with a terrace:
- A small studio with 17 m² instead of bedroom 1
- A medium-sized studio with an area of 25.37 m² instead of bedrooms 1 and 2
- A large studio instead of the living room (29.6 m²)
The division of a property to increase its profitability: is it a good idea?
This cannot be done with just any apartment: the developer must respect a large number of normative constraints. But we can, say, play with these standards to get an apartment that is compliant, but easily changeable afterwards (part of the work has to be done after delivery).
This apartment rents for around € 1 and costs € 000, which gives it a profitability of 330%.
Let's start with what can't be changed:
- The entrance area
- The surface of the room 1
- The surface and equipment of a toilet
- The surface and the bathroom
- The surface of the kitchen
- The apartment must be delivered habitable (toilet and shower installed)
Overall, this involves respecting the minimum regulatory surfaces to allow people in wheelchairs to use the apartment.
What the promoter can do before delivery:
- Remove partitions from bedrooms 1 and 2
- Arrange the bathroom to install a toilet
- Changing the position of the toilet and the door in the toilet
- Fit the partitions of the bathroom of the large studio and install the equipment and the flooring
- Change the location of the kitchen door
However, the promoter may refuse to make the changes. The easiest way is to present the list and a modified plan and ask them for a quote. Note that changes on the plan are expensive and it is better to ask well in advance, because it is the building permit that may be changed. If you are a handyman, above all, do the work yourself.
What you will have to do after delivery and after going through compliance:
- Installation of the small and large apartment kitchenettes
- Changing the doors to ensure security and sound insulation for tenants
- Arrangement of the bathroom of the small studio
The electrical wiring is already done and a telephone socket and TV antenna is accessible in each room.
We are playing here with the limits of disabled standards and it is obvious that before embarking on such a project it is better to seek advice from an architect in order to ensure the conformity of the apartment.
The additional cost of the work is estimated at around € 10 and a little elbow grease. The price of this apartment is 000 € and notary fees are free. I estimate the price of rents with regard to the housing situation and the type of construction at around 330 €, 000 € and 450 € without charges. The advantage of new housing is that you can set higher rents than for old housing. This increase will most often be recovered by the tenant thanks to lower charges (BBC building).
Gross profitability will therefore be:
[1 * 650 / 12] * 340 = 000%
Instead of 3.63% if you had rented the 4-room apartment without modifications. That is a 60% gain in profitability.