Gutting a 4-unit: all at once and lose all the income, or one unit at a time over 18 months

Trades side, and no, the phased version doesn't work the way your spreadsheet has it.

The 400 amp service with individual meters means every unit gets a new feeder and a new panel, and every unit's branch circuits get re-terminated. You can't energize a new service to one unit while three units are still hanging off the old distribution, not for long anyway. Utilities generally want a single cutover, and depending on your area the inspector may not sign off on a hybrid arrangement at all. Rules on this vary by jurisdiction and utility, so ask your electrician to call it in before you plan around it.

Same with the boiler. One boiler, four units. The day it comes out, nobody has heat. If you're doing that in a phased plan you're doing it in July and you're relocating nobody, or you're doing it in November and you've got a problem.

What's actually phaseable: kitchens, baths, flooring, plaster, unit-level plumbing branches once the risers are done. That's maybe 55 of the 82 per unit. The rest wants the building empty for a stretch.

Something here I want to ask about. If the tenants are 40 percent under market and they've been there a while, is emptying the building even something you can just decide to do? I assumed there'd be rules about that.

@juniper there are, and they depend entirely on where the building is. Some states and cities have relocation assistance requirements, notice periods measured in months, and rules about renovation as grounds for ending a tenancy. Others have almost nothing beyond the lease terms. That question needs a local attorney rather than a forum, and it needs answering before the GC bid matters at all, because in some jurisdictions the cost and timeline of vacating four long term tenants is a bigger line item than the roof.

@cairn, I'd want to know what your leases say and what your local rules require before I'd trust either path's timeline.

Taking your numbers as given and then arguing with them.

Path A: 265k construction, 30,800 lost rent, 8 months carry. Call carry 8 months on a 265k renovation draw averaging maybe half drawn, plus your existing debt. You didn't give me your current debt service so I can't finish this, and that's the number I'd want most.

Path B: 328k, 18 to 24 months. Your 92k of retained rent assumes three units stay occupied and paying through 18 to 24 months of construction noise, dust, and a contractor in the hallway. In my experience that number comes in light. Assume one of the three leaves early and one negotiates a rent reduction, and your retained income drops meaningfully.

Path B also delays the whole rent lift. Under A you're at 6,400 gross in month nine. Under B you get there in month 20 at the earliest, and the last unit's renovated rent doesn't start until then. The difference in stabilized income between month 9 and month 20 at 2,550 a month of lift is about 28k, which and B was already behind before that.

And @solder just told you the building-wide work forces a vacancy window in the middle of B anyway. So B is A with extra steps, more cost, and a worse start date.

The structural problem with the phased plan is the one @solder named. Service upgrades with new individual meters and a single-boiler replacement are building-wide events, and they generally require a coordinated shutdown that's incompatible with occupancy. That collapses the clean comparison between your two paths, because Path B contains a hidden Path A window.

On the underwriting, three things determine which way this goes and none of them are in your post.

What your existing debt costs per month, and whether that lender permits the work at all. Many small multifamily loans carry covenants around alterations and around the property's occupancy, and a building taken to zero occupancy can trip a condition. Read the note and confirm with the lender in writing before you plan a full vacancy.

What the local rules require to vacate long term tenants for renovation. This differs sharply by state and often by city, covering notice periods, relocation payments and whether renovation is permitted grounds at all. That's a question for a local attorney, and the answer can change the cost of Path A by tens of thousands.

What the finished building appraises for and refinances into. Your gross goes from 3,850 to 6,400, so 30,600 of annual gross lift. Net of a reasonable expense load and vacancy, the value created against 265k to 328k of spend is the actual test, and it's what determines whether you can take construction money out at the end. Get an appraiser's opinion of the stabilized value on the planned spec before you commit, because if the refinance doesn't cover the construction debt you're carrying that gap indefinitely.

The scope creep risk here is above average. Plaster over lath in a 1920s building hides framing conditions and old alterations, and once three units are open at the same time you lose the ability to stop.