Value‑Add in 2025: Renovations That Still Pencil

Operators in 2025 are playing “heads‑in‑beds”—prioritizing occupancy over aggressive pricing while supply is absorbed. RealPage reports national occupancy rising to mid‑95% by mid‑year as demand remains resilient; renewal conversion hit ~55%, signaling resident stickiness.

On the cost side, there’s a silver lining: Yardi Matrix notes expense growth (including insurance) has decelerated in 1H25 compared to prior spikes—marginally improving the ROI math for targeted kitchen/bath refresh, flooring, and in‑unit W/D adds. Still, underwriting should lean on OPEX wins (LEDs, water sub‑metering where applicable, HVAC optimization) as much as rent premiums.

Playbook highlights:

• Scope for speed: favor repeatable SKUs and vendor bundles; the goal is turn-time as much as finish.

• Amenities that lease: package rooms, pet spaces, and micro co‑work areas often outperform “nice‑to‑have” amenities when measured against actual lease trade‑outs.

• Pricing discipline: align premiums with proven comp sets and monitor concessions burn‑off closely in high‑supply submarkets.