Start with the claim the budget depends on

A $15,000 apartment renovation can look compelling when the acquisition model assumes another $150 in monthly rent. That is $1,800 a year, or 12% of the renovation cost, before collection losses and any change in operating expenses.

The question is whether that $150 premium is supported by comparable leases. A gap between a property’s current rent and a broad market statistic does not establish how much value a new kitchen, flooring or bathroom will create.

The market number changes with the unit

In the Census Bureau’s 2020–2024 ACS five-year estimates, the Sioux Falls metro’s overall median monthly gross rent was $1,022. The estimates by bedroom count were $873 for one-bedroom units, $1,038 for two-bedroom units and $1,309 for three-bedroom units.

Those figures come from the public Census series in the market research database behind our Markets page. They describe different groups of occupied rental homes. They do not identify a renovated-versus-unrenovated rent premium.

Bedroom count is only the first distinction. Location, square footage, parking, laundry, condition and utility responsibility can change the comparison. A metro-wide median also includes a range of buildings and lease histories.

Gross rent includes contract rent plus tenant-paid utilities and fuels, as explained in the Census gross-rent definition. It is not simply the amount collected by the landlord. The five-year estimate covers 2020 through 2024; it is not a quote for a newly renovated apartment available in October 2026. Census ACS guidance explains the estimate periods.

Test the premium before committing the capital

Consider a hypothetical renovation costing $15,000 per apartment, including the work and other upfront project costs. Assume a 5% allowance against the additional rent for vacancy and collection losses, plus $25 a month in additional recurring operating expenses. These assumptions isolate the renovation’s incremental economics; they are not a Metastone property forecast.

At a $150 monthly premium, additional scheduled rent is $1,800 a year. After the $90 income allowance and $300 of additional operating expenses, incremental annual operating income is $1,410.

At a $75 monthly premium, additional scheduled rent is $900. After a $45 income allowance and the same $300 of additional expenses, incremental annual operating income is $555.

Half the premium has a larger effect on the result

Halving the rent premium reduces incremental operating income by about 61% in this example because the additional operating expenses stay fixed. The renovation cost is unchanged.

The percentages above divide incremental annual operating income by the upfront renovation cost. They are simple annual cost yields, before financing, taxes and future capital spending—not total investment returns, cash-on-cash returns or IRRs. They also exclude any further lost income from renovation downtime. A real budget must account for that timing and lost rent.

This is why a renovation budget should be tested against the lower premium supported by the evidence, as well as the target case. A disappointing rent outcome cannot be repaired by keeping the original projection in the spreadsheet.

Evidence that can change the decision

Start with executed leases for genuinely comparable units, including the lease date, concessions and what the tenant pays for utilities. An advertised rent shows what an owner is asking. It does not establish what a tenant ultimately agreed to pay.

Within the property, compare units with the same layout and similar lease timing. Record the complete cost of the work, days offline, achieved rent and concessions. If practical, use a small group of renovated units to test the proposed scope before committing the full property budget.

A higher rent at a renovated unit still needs interpretation. If it also has a better location, different utility arrangement or more space, the entire difference cannot be attributed to the renovation.

If the achievable premium does not support the proposed work, change the scope, cost or acquisition basis. Market data can help identify where to investigate. Signed leases and complete project costs determine whether the renovation earns its place in the plan.

Source and method

Source: U.S. Census Bureau, 2020–2024 ACS five-year estimates, tables B25031: median gross rent by bedrooms and B25064: median gross rent, Sioux Falls metropolitan area (CBSA 43620). Values were read from the publicly cleared market research database on October 20, 2026. These are survey estimates with sampling error; no statistical significance test or current renovated-unit rent comparison is presented.

The renovation scenarios are hypothetical, use the assumptions stated above and are rounded for display. They are not company investment results or a forecast. This product uses the Census Bureau Data API but is not endorsed or certified by the Census Bureau.