August 31, 2016

Five Ways to Increase Income Property Values


Commercial real estate investors enjoy two significant 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 increase the value of their investments. Here a five ways to do that:

1. Increase Rents – 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 property’s value. Looking at buying a property?  Buy one with below market rents in place so you can increase rates as leases renew to add 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.  New paint, signage, landscaping and lighting are examples of ways to improve value and 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.  If your property was built many years ago, there may be a better use today than originally intended.

4. Decrease Expenses –  Have you protested your property taxes?  If not, you should.  What about insurance, janitorial, or maintenance services?  You can’t protest them, but you can 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.  Passing on increases to tenants using an Expense Stop can also help control ownership expenses.

5. Tenants – 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 a prospective tenant’s business experience and ownership credit worthiness can help provide a stable long-term tenant mix, adding value for any prospective investor.

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

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