There’s an art form to renegotiating lease increases. The tenant must feel they are getting the best deal possible and even some perks to the deal. Discuss with the tenant about having timely maintenance and the desire to work together. Run an incentives program for those who pay on time. As you renegotiate the terms of the lease, make sure the tenants know the quality of renovations and how their new apartment is going to look.
For every $1,000 that you save a year, you have increased the value of the property by another $10,000 (10% cap rate). Review every expense for the complex and determine what can be cancelled or trimmed. Then renegotiate contracts with vendors.
3. Laundry Facilities
I owned a 56-unit apartment complex that didn’t have washer and dryer hook-ups. So, I converted one unit into a laundry facility. I ran my numbers and knew that I would either break even on the laundry facility or possibly lose up to$100 a month. I went to each tenant and asked if they would they sign a lease increase of $25 a month if a laundry facility was provided. On the first round, over 80% of the current tenants signed a lease addendum stating they would pay $25 more a month once the laundry facility was open. That was a $1,100 increase in rents per month, which meant over $13,440 a year. Let’s assume my numbers were off and I lost $300 a month. That would be $3,600 a year loss, but I would still have more than a $9,800 gain per year. On a 10% cap rate, that made the property worth $98,400 more!
Some laundry companies will put the machines in for you and service them. You can search on the Internet for a company near you. Mac-Gray is the company I’ve used numerous times.
4. Cable Television
Cable companies will give you bulk pricing if you contract for all units to have cable. Cable companies will charge a flat rate to activate cable services in all units. This can help you increase rents IF you have negotiated it with the tenants. However, if you add it and make it available then try and raise rents, your conversion rate will not be great.
5. Quality of Appliances
For years, I went back and forth on buying used appliances for $400 a set to buying new appliances for $900 a set. The money I saved up front, I usually lost in replacing broken appliances. However, when I had new appliances installed, I always rented the unit for more money.
6. Updated Kitchens/Baths
Your apartment complex is someone’s home! When you approach a business and an opportunity to make money, you look at the surroundings. The person living in your complex or potentially looking to move in views this as their place of residency… a place where they will entertain family, raise their kids, and invite friends to cook out.
Invest money on the outside of the apartment complex, and it will pay off in the type of tenants you attract. Plant some perennial flower beds and some flowering trees. Keep the beds mulched and weeded year round for the best appearance. Always keep any grassy areas mowed and trimmed regularly so that the landscaping is appealing when tenants arrive home. Pride in the outside of the property will also build pride in the inside.
8. Add Storage units, adding a place for tenants to store stuff like bikes and toys will give them extra room and they will pay for having that convenience. it will increase your bottom line, plus bring in tenants that can't get that in other rentals. good option if you can fit more storage units and charge more than you would make for a single bedroom apartment.
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