Increase your Revenue & Property Value
In addition to increasing a property’s ongoing revenues, value-add investing can also directly raise the property’s sale price. Typically, an apartment building’s underlying value is based on its net operating income (NOI)— (all of the property’s income less expenses (not including the mortgage or other debt). If you can raise the NOI on a multifamily building, you can directly increase the value of the property; If you can add a few hundred dollars per month in revenue this can translate to many thousands of additional dollars when you sell the property.
Value-Add Strategies for Multifamily Investors
Below are a few common value-add strategies that have helped multifamily investors increase the revenues and underlying value of their properties.
1. Add amenities to boost rents
Let’s say you have an apartment building with some unused space—maybe a large, unfinished basement that’s just collecting dust or that you use as a storage area for supplies or maintenance materials. Consider converting this area into a lounge, rec room, or even a gym. With more luxury-level amenities, you can then attract more affluent tenants and raise your rents.
2. Charge for parking
If your property already has onsite parking for tenants, you can slowly introduce a monthly fee for this service, set aside a few premium spots (such as those closest to the building) and charge only for those, or add more parking for guests and offer your tenants paid parking placards that they keep to use for visiting friends or relatives.
3. Create storage units and charge monthly fees for them
This can be one of the most popular amenities you offer—because everyone has too much stuff, and apartment tenants typically have less space than homeowners do. If your property has an underused closet or even outdoor common-area space, such as along the rear of the building, you can convert that space to small storage units and offer them to your tenants for a monthly fee.
4. Install LED lighting
According to the US Environment Protection Agency (EPA), light-emitting diodes, or “LED” lights consume up to 80% less energy than the old-fashioned incandescent or compact fluorescent lights in most buildings today, and they can last 15 times longer as well. In other words, switching your multifamily property’s lighting to LEDs can help dramatically reduce your electricity bill and help you save on the materials and labor costs of regularly replacing burned-out bulbs through your property.
5. Reduce water usage
If you are paying for tenant water, it will likely be one of the largest single expenses on your multifamily property, and most apartment owners today are needlessly spending more on water consumption than they need to. Relatively simple and affordable steps, such as installing low-flow toilets and showerheads, can reduce tenants’ water usage by as much as 30%. Converting some of your property’s landscaping from water-hungry grass and bushes to rock, cacti, or even more drought-tolerant grasses can also save you significantly on your water bill.
Grow Your Multi-Family Portfolio
If you’re looking to invest in real estate and need the funds to do so, GL&L Holdings can be your source for those funds and can even help you with the strategies that can help you have a successful outcome. If you want to do a joint venture with us, we’re also open to doing so. Call us at 832-770-9415 or email us at info@gllholdings.com
