Investors in multifamily properties are often looking for ways to increase rents at their properties. In order to maximize rents, there are 3 things to remember before you advertise your next vacancy according to Carlos Azucena, founder of CFA Property Advisors of Marcus & Millichap.
Do the Little Things
Tenants don’t want to show up to a property where the landscaping is overrun, paint is peeling, or trash is strewn about. Take the time to address these low-cost fixes as first impressions matter when you are trying to achieve market rents. Just as you wouldn’t want to show up to your own home in this condition, tenants feel the same way. They will reward you with fair rents and longer-term tenancy.
Complete a Thorough Renovation of an Older or Dilapidated Unit
Could your rent be $100, $200 or even $500 higher if the apartment was remodeled? If so, you may be missing out on a great opportunity to gain a high return on your investment. Many owners look at the time it will take to recover the cost of the remodel and are discouraged. However, if you invest $10,000 into a unit that allows you to achieve $200 more per month, that is a whopping 24 percent annual return on your investment! A $200 rent bump also translates into almost $50,000 in value at a 5 percent capitalization rate. Now that’s a great investment!
Understand Your Market’s Rents
A wise person once said – “If you don’t know where you’re going, then you don’t know where you are.” In other words, how can you tell if your rents are below or even far below the market if you don’t know where market rents are? Market rents will vary between quality, condition and location even within the same neighborhood. You can do your own research by going online and see what others are asking and what they are offering. For insider info, you can consult with a local property manager or an apartment real estate broker. An experienced apartment broker would provide this information for free and with a high level of detail.
Author: Carlos Azucena is a real estate broker with ~15 years of experience in apartment sales, representing buyers and sellers.