Browsing: multi-family investing

housing-market
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They say that the Manhattan property market has been in a correction for a year already. Some think that will keep spreading—though many say we won’t face another crisis like 2008. Whether or not you’ve experienced a correction, there are things you can do now to mitigate risk when it happens. Here’s what I do.

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  1. Prices are Falling — Prices for apartment buildings are steadily dropping. Many apartment building owners paid way too much for their properties over the past few years and now their properties are worth less than what they owe. Apartment buildings are starting to show up as foreclosures across the country and it is further pressuring prices to the downside.
  2. Forced Appreciation — You don’t have to wait for real estate prices to go back up to increase the value of your apartment building investment. You can increase the value of you apartment building by increasing the rents, cutting your expenses or by making physical improvements on the property.
  3. Less Competition — Many investors are under the false impression that owning an apartment building is more difficult than owning single family homes, therefore their is less competition for prime properties.
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As investors, we’re always looking for ways to increase the value of our properties. Most of us are familiar with the more conventional ways of doing so: decreasing expenses and increasing income. What if I told you it was possible to increase income without raising rents or decreasing expenses? Let’s explore a few ways that is possible.

Increasing Value with Vending Machines

If you own a fairly large complex, it would make sense to install a vending machine. Assuming you’re an expert of your market, you could effectively target your tenants by placing products you know your tenants would want in the machine. The best place to put your vending machine is in an area that generates a solid flow of tenants; the laundry room or near the pool (if you have one and your property is located in warmer markets) are two good choices. Even modest vending revenues increase the property’s value significantly. Assuming the property is in a 6% Cap rate area with yearly vending revenues of $720, you would have increased the property value by $12,000! Not too shabby given our modest revenue assumptions.

Tapping rarer, but more lucrative, value potential

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