Tips on how to increase the value of your multifamily real estate property
Only Do Upgrades For Which Tenants Will Pay
When rehabbing, or improving a multifamily property, investors should examine the market where the property is located, adding amenities that add maximum value with minimum costs. For example, if the property is located in a neighborhood where the value, or rental amount is X, given certain amenities, an investor should stay within the parameters of those given amenities, as that is the market. Adding improvements that exceed the quality, will not add additional value, as the equilibrium point has been reached (determined by an analysis of comparable, and rental demographics. You get all this information for free here (just search for your property address: www.smartcapital.center ). For example, adding expensive carpet to units when the majority of units, have vinyl flooring would be counter-productive, contribute toward diminishing returns, and would not yield a greater return on investment, as the associated expense would exceed the return in property value or rent. But, adding vinyl flooring would yield a greater per capita dollar return on investment relative to expenses (cleaning, replacing, upgrading etc.) In other words, there would be a maximization of profits and a minimization of expenses over time.
Make Tenants Pay for Their Utilities Directly
Additionally, having tenants pay for the services they use on a daily basis would greatly reduce the variable expense of utilities. Having the tenants pay for their own utilities (water, gas and electric) is wise, as tenants would be more frugal and thoughtful in using these valuable resources as it is an expense they incur.
Install LED Motion Sensor Lights
Furthermore, to further reduce expenses, and increase value, installing LED Motion Sensor lights would be an efficient improvement. The motion sensor characteristic in LED lights discourage vandalism, as it is activated by movement, which in turn may serve to reduce insurance costs, due to decreased probability of damage/robbery to property. Also, they serve to create efficiency with regard to energy use, as lights are automatically turned off if there is no movement, which can save substantially on energy costs.
These are just a few antidotes that can help investors create value. If you have any questions, please feel free to reach out to us at hello@SmartCapital.Center or via the form below.