Top 5 Ways to Increase the Value of Your Apartment Building
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- Raise the rents. This is definitely the most obvious solution if you are look at different ways to raise the value of your apartment building investment. Before you decide to raise rents do a survey of comparable rents at comparable properties in your general location. Then try to figure out what the average rents are for your specific type of property in your specific location. This can be more tricky than it sounds and is more of an art then a science. Ask yourself if your rents are below or above the “market rents” for your area. If you find that you are charging below market rents then it is advisable to bring your rents up to keep up with current market conditions.
- Install energy efficient lighting. If you pay for the electric in common areas it is always a good idea to install energy efficient lighting. Not only will this save you a lot of money in the long run but you will also be helping the environment.
- Reduce tenant turnover. Every commercial real estate investor knows that when a tenant leaves and you have to replace him or her that it costs money. Apartment building tenant turnovers can really eat into your bottom line if you are a commercial real estate investor. There are a multitude of methods to use that will effectively reduce tenant turnovers. Some of them include: keeping the rents at market, maintaining the grounds nicely, responding to maintenance requests promptly and sponsoring quarterly parties or activities. In short, if you keep your tenants happy and the apartment building maintained nicely then you will reduce your tenant turnover.
- Renovate the apartments. Renovating and improving the apartments with new appliances, paint, lighting/bath fixtures will allow you charge more rent for the same square footage. What this means is that you have effectively increased your net cash flow without increasing your fixed costs such as taxes and insurance.
- Cost segregation analysis. While we don’t have the time or space to discuss the intricacies of cost segregation analysis, it is basically a method of accounting that allows you to depreciate your building and expenses at a faster rate and save you a lot of money. Consult a qualified cost segregation analyst or CPA.