November 28, 2012

5 Ways to Increase the Value of Your Commercial Real Estate Investments

Craig Trbovich Commercial Real Estate –

Commercial real estate investors enjoy two primary financial benefits from their investments: income and appreciation.  Appreciation is commonly achieved as your investment increases in value over time.  Savvy investors understand there are other ways to add value to their investments that they can influence or control.   By increasing Net Operating Income (Gross Operating Income minus Operating Expenses) you can increase the value of your income properties.  Here a five simple ways to do that:

  1. Increase Rents – Sounds simple and difficult at the same time.  The bottom line is know your market and monitor rents and concessions closely so that that you are both competitive and pushing for the highest possible rents.  Trading initial concessions for higher future year rental increases can also be a great way to increase your properties value.
  2. Make improvements – Sometimes the little things can mean a lot.  Covered parking and a common conference room are examples of improvements that you can charge additional fees for to improve income to the property.  Simple ideas like new paint, signage, and lighting are examples of ways to improve value and will help attract tenants to your properties.
  3. Change Use – Maybe you have an old office or warehouse building on a busy street that could bring higher rents as a retail use.  Or a general office use could be upgraded to medical office use.  Whatever it is, if your property was built many years ago, there may be a better use today than originally intended.
  4. Decrease Expenses – Another simple but difficult to do at times.  Have you protested your property taxes?  If not, you should annually.  What about insurance, janitorial, or maintenance services?  You can’t protest them, but you keep them honest by checking rates from other vendors periodically.  And there are continuously new ways to more efficiently use power and water to save money and increase your NOI.
  5. Tenants – Although it has been tough the past few years to find tenants, landlords still need to be cautious about accepting a new tenant.  The cost of tenant improvements and leasing commissions can easily be as much or more than the tenant’s first year’s rental payments.  Eviction and the resulting vacancy can also be expensive.  A careful check of the tenant’s business experience and ownership credit worthiness can help ensure your tenant will be a long term success to your property and your bottom line.

These are just a few ideas that I hope will help you to continue to think of ways to improve your portfolio’s value and cash flow.  For a no obligation analysis of your property please call me at (408) 522-2799 and “TrboCharge” your investment real estate today.

In the News
About Craig