After purchasing a commercial property, most real estate investors will see a return on their investment from the rental income provided by the tenants. However, investors can increase their return by increasing the property value. Below are tips in order to gain equity in their investment.
If the market will accept higher rent prices, it may be a good decision to increase the rent. Before making any changes, property managers must make sure that the increase in rents will still allow for almost full tenancy. The increased rent will increase the estimated future income that will be used when new buyers are valuing the property.
Small tenant improvements such as repainting or changing the carpet may dramatically increase the equity of the property as well as the possibility of new tenants renting the unit. These changes can be small but done correctly, they may reap large rewards. Real estate investors can also install energy efficient lighting in order to save on costs. This will, again, increase the estimated future profits of the property. Looking into other energy efficient improvements may be worth the assessment as well.
Reduce Tenant Turnover
When tenant turnover is high, it can be expensive for the commercial real estate investors to pay for the marketing to find another tenant. The paperwork, commission, and cleaning between tenants can also be expensive as well. Decreasing tenant turnover will dramatically decrease the costs associated with finding new tenants. In order to reduce the tenant turnover, real estate investors should keep the rent prices at market level, respond quickly to tenant complaints, maintain the property, and host communal activities.
Increasing property value can be a large aspect of a commercial real estate investor’s profits when purchasing a property. If real estate investors use the above information, they may be able to more easily obtain equity increases and higher rental profits. Comment below with other tips and follow me on twitter!
Photo Credit – Tanamera Construction