How to Solve Common Apartment Issues—and Make a Profit
Recently, I had a whirlwind day, walking through two apartment buildings and tons of units. One of the buildings my company and I own; the other building we are about to put under contract.
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After walking these buildings, I want to share two super important lessons that I learned. These lessons will help you not only evaluate apartment buildings but also make them more energy efficient and profitable once you own them!
Apartment Buildings: Common Issues & Solutions
I learned two lessons on this day:
- How to manage owner-paid utilities. I am not the biggest fan of owner-paid utilities; however, if managed correctly, you could create more energy-efficient buildings and even generate some additional cash flow. This is powerful if you can scale with multiple units in one building. Put limits on thermostats, improve insulation, and install faucets and shower heads designed to conserve water.
- How to increase below-market rent for current tenants. If you want to keep good tenants in-place but increase below-market rent to current rates, consider internal and external amenity improvements. We are going to offer residents a menu of possible upgrades. For instance, “For $75/month more, would you like new flooring? New kitchen cabinets?” We also plan to make exterior improvements to the property, like adding a playground.
In the video above, I go into more detail about the utility and rent issues I discovered during this walkthrough and effective solutions for dealing with each.
The moral of the story? The path to success in real estate involves identifying problems like these and coming up with creative ways to remedy them, taking into consideration both what you want and what is best for your tenants.
How would you overcome the issues I discovered during this walkthrough?