7 Ways To Add Value To Multifamily Properties

7 Ways To Add Value To Multifamily Properties

Value add properties are specifically attractive to an investor who not only want to enjoy greater returns than just passive income yields, and want to be able to control the value of their own investments. This can be for long term wealth building, as well as cashing out and creating larger short term gains through refinancing or re-selling assets after the improved performance has been seasoned.

Here are just seven of the ways multifamily investors can add value.

1. Raise the Rent

One of the easiest and most obvious ways to add value is to simply raise the rents. Many buildings are suffering and are available at discounts due to being leased under current market rents. The one caveat here is watching out for rent control regulations which may limit the ability to raise rents. Otherwise, tenants can be renewed at higher rates.

2. Maximize Occupancy

Despite the strong economy over the past few years, many apartment buildings have been suffering low occupancy rates. This is often due to the recent boom in new players trying to take advantage of the property management industry, as well as out of area funds who haven’t invested the time to get to know the local renter pool and market. Too often they leave large numbers of units open to having low retention rates.

By diving in with the right pricing and application process and ensuring the marketing fits the best renters in the local tenant pool occupancy rates can often be lifted substantially in a short period of time.

3. Improve Rent Collection Performance

Renter performance is a big factor for value. Those who routinely pay a few days late can be a nuisance, but can also add more income. Though if not kept in check this can lead to big losses and high churn rates. Better rent collection processes can minimize this risk, and keep cash flow consistent. That may be an on-site manager. Or it could be accepting online rental payments or even cryptocurrency payments.

4. Add Units

Adding to the unit count is a great way to elevate both income and value. This can be done by reconfiguring units, reducing parking and adding new buildings, or even just adding pads for future buyers to construct new units.

5. Reduce Expenses

Once you’ve maximized the income, the other way to improve profitability is to reduce expenses — target utility wastage and property management costs.

6. Improve Reputation & Online Reviews

Leasing performance and even perceived property value can be heavily reliant on online reviews today. Having a system and taking a proactive approach to boost positive reviews and online reputations can help a lot.

7. Physical Improvements

It is important to be sure there is a positive return on improvements made. Though everything from better signage, to major items which will make it more appealing to a new buyer like roofs and appliances and AC, can add value.