How to increase the value of an income building

As the owner of a real estate park, you are always looking for solutions to increase the value of your income building. The increase in monthly rental income is the nerve of the war of any owner. The more revenue your building generates, the higher its value will increase. Whether it is to resell the building in the short term or to keep it in the long run, an increase in revenue will mean more money in your pockets. Owner of a building for several years or recently, several solutions are available to you. Let’s start with a simple calculation to show you how a small monthly increase in your rents can blow up the value of your income building. [message_box bg_color=”rgb(65, 100, 206)” padding=”17″] Example : You own an 8 units and rent $1000 per month each of the rents and you increase their rent to $1050 by including the Internet in your leases. You generate an additional monthly income of $400 (8×50). Withdraw $160 ($20 per dwelling) for internet charges (Bell or Videotron). You’ve got $240 more monthly. The value of your building has then increased by about $72 000 (8 units x $50 monthly x 12 months x 15) with a minimal initial investment. [/message_box] In this post, we will suggest some of the methods to increase your monthly rents always aiming to increase the value of your building:

Increase the value of income building by doing renovations

Of course, one of the most popular suggestions is to make major renovations in your building. TheCanadian Institute of Evaluators conducted a survey and here are the results: The work that offers the best returns on investment is as follows: Bathroom Renovation: From 75 to 100% Kitchen Renovation: From 75 to 100% Indoor and outdoor Paint: from 50 to 100% Replacement of Roof shingles: from 50 to 80% Replacement of furnace or heating system: from 50 to 80% Basement renovation: From 50 to 75% Adding a recreational part: from 50 to 75% Installation of a fireplace: from 50 to 75% Upgrading floors: from 50 to 75% Construction of a garage: from 50 to 75% Replacement of windows and doors: from 50 to 75% Construction of a patio: from 50 to 75% Installation of central air conditioning: from 25 to 75% The most popular renovations: Redevelopment of parts 34% Flooring 32% Paint or wallpaper 32% Windows and doors 20% Major landscaping work 18% Interior walls and ceilings 15% Plumbing fixtures or Equipment 14% Roof and gutters 14% Electrical apparatus and equipment 10% Additions to the frame 8% Heating and air conditioning equipment 7% External Walls 6% Recessed Appliances 3% These options are very interesting but they all require several thousand dollars of investment and a lot of time to plan the work, hire contractors (… or do the work yourself) and follow up on the site. In addition, major work in a building can be a negative factor for tenants looking for housing and an irritant for current tenants. It is very interesting to make renovations to increase the value of a rental building but weigh well the pros and cons before choosing and above all, invest in the right niche and avoid any extravagance that will go from fashion quickly. Amount Required: High Return on investment: Excellent Time: Long term

Include Internet in tenants lease

The internet has become an essential tool. By including itas an additional service in your leases, your building will be more attractive than your neighbor’s. In addition, this is the method that will give you the fastest return on investment. See our example at the beginning of the article, a minimal investment that will earn as much for your monthly income as when you refinance. We estimate the return on investment of about one year. No further improvements to your building will give you that kind of return. All you have to do is contact us and we take care of the rest… including support to your tenants! Amount Required: Low Return on investment: Excellent Time: Short term

Renting unused spaces

Your building may have unused spaces. Any space can generate additional revenue. Parking, sheds, storage areas, basement. Be creative and offer extra services to your tenants to increase their rents. We converted a 3 1/2 to 4 1/2 simply by moving a huge storage space to a shed and transferring a parking space from a tenant who did not need it to a tenant who wanted two. Also consider renting parking spaces to locals who are not necessarily your tenants. Especially convenient in neighborhoods where parking in the streets is few. Amount Required: Variable Return on investment: Excellent Time: Long term

Reduce your operating costs

If you have done everything you need to increase your rent, you have to deal with the costs of managing your building. By being limited on the income side, it is essential to tackle the recurring costs of your building and that will eat up your profit monthly. Insurance deductible, snow removal, housekeeping, landscaping. Take the time to negotiate your snow removal or landscaping contract each year. Ask for another quote to check the prices requested by your current suppliers. Even if you are very satisfied with the service, negotiate your current supplier with comparable contracts from the competition. You’ll get a winner. Good thinking!