10 Ways To Massively Increase The Value of Your Commercial Property
Increasing the value of your commercial property is actually a lot easier than most people think. The fundamentals of it are that with each additional dollar that your property pulls in each month, the value of your commercial property increases. While there are hundreds of different ways to get your property generating more cash each month, some are more costly than others and the ones with the higher costs aren't always the ones that increase your property's value the most. In fact, its the low cost ones, that are created with your renters' best interests in mind, that typically generate the greatest return on investment.
Because each type of Commercial Property is different, in this article I'll be focusing on how to increase the value of your multifamily property, specifically 5+ unit apartment complexes.
Over the years I've tried many different ways of increasing my commercial properties values and found the following 10 ways to be the cheapest, yet provide the largest return on investment. The reason why these 10 increase the value of your property the most is because you're making small changes that make life DRAMATICALLY better for your renters. Happy renters never want to move out and they spread the word about how great it is living at your property, which causes even more people to want to move in. You see, the longer you can keep a renter, the lower your vacancy rate and turn over costs will be. So, with your apartment complex always think of what can you do to make your renters happier with where they live so that they never want to move out.
1. Install a Laundry Room
Installing a laundry room is the #1 easiest way to create massive value in your property. By doing so, you make life so much easier for all your renters that used to have to drive miles away to the local laundromat to do their wash. They never have to leave your property... which is exactly what you want! You don't just want them to never want to leave though, you want them to share with their friends and family how great it is living in your property. To do this, you must keep that laundry room clean, well lit and properly ventilated. It's so important to make that laundry room like a little slice of heaven because it's not just to impress your current renters, but also your future tenets. As prospective new renters come around, the women, who always make the final decision, will take note of your spectacular laundry room and tell their husbands or boyfriends that this is the place for them. Prospective male renters also notice that the laundry room is filled with happy women and what guy doesn't want to be surrounded by happy women? So you see, the laundry room is great marketing tool for both sexes. Not to mention that it brings in extra money every month that increases the value of your property.
2. Add Vending Machines
My second favorite way of increasing the value of my apartment complexes is to install vending machines. These can be placed in your spectacular laundry room or outside with or without the protective metal grating (depending on your neighborhood and class of renter). I typically have one dedicated to refreshments and one for snacks. Always make sure your vending machines have a good combination of healthy choices as well as unhealthy. This means you should offer water and healthy juices to counteract the unhealthy sodas such as Coke, Pepsi, Mountain Dew, etc. The same applies for snacks. Always offer healthy choices such as trail mix and dried fruit to counteract the unhealthy candy bars. The reason why its so important to offer healthy choices is because it's just better for your renters. Healthy foods make people happier and happy renters is EXACTLY what you want! You want moms who run down to the vending machines to get their child a snack to be able to give them something with nutritional value, not just something that's going to make their kids fat as well as temporarily hyperactive. Plus, if you don't offer healthy choices, your best renters (the female ones, who...need I remind you...make all the decisions) will speak ill of your complex and move out sooner than if you had put their and their children's needs first.
3. Add Security Patrols
My third favorite way of massively increasing the value of my multifamily properties is to provide security patrols. These security patrols involve one person walking the premises four times a day. They are not police officers and can't make arrests, but they are a great deterrent of crime. The cost is very low and it shows that you care enough about your renters that you want to make sure they always feel safe and secure. And as every report on multifamily tenets will tell you, feeling safe and secure is the #1 need of every woman and family when they are deciding where to live. To pay for these patrols, and turn an extra profit, always charge a little bit more than you normally would, but don't gouge them. You want to make this a win-win-win situation. You want your tenants to feel safe and secure (and tell all their friends and family what a wonderful place it is to live), the patrols will deter crime on your property which will improve the whole area's value, and you still make a little extra each month after paying for the security patrols which increases the value of your property.
4. Gate Your Property
My fourth favorite way to massively increase the value of my apartment complexes is to gate them. Most multifamily properties already have fencing around them, except for the driveway. I find that by adding an automatic fence that I can increase rents enough to not only offset the expense of installation and maintenance, but also to turn a GREAT profit!
Depending on the size of the property, I'm talking an extra couple hundred to thousands a month!!! This extra income significantly improves the value of your property as well as raising the bar in your area. Not only do you raise property values for your entire community (which your neighbors will love) but you also put your property one level above your competition. Think about it, wouldn't you rather live in a gated community if it only cost $25-50 extra a month? I sure would! By gating your property you also attract a better class of clientele that tend to stay longer. This results in lower turnover costs and vacancy at incredibly low rates! You will attract a wealthier crowd with families. These are the clients everyone wants because they're not as price sensitive to yearly increases. Families love gated properties because they know they're children can go run and play in the complex and that they'll be safe from outside predators. Throw in the security patrols and you'll have the safest property in the area. Your tenants will glow about your property to their friends and family...which will lead to them wanting to live there too! That's when you start building your waiting list and your vacancy rate drops to almost zero!
5. Add Carports
My fifth favorite way to massively increase the value of my multifamily properties is to take extra parking spaces and build carports over them. I then offer the carport spots to tenants for $25-50 extra a month. My carports are ALWAYS full with a waiting list because no one likes to go out to their car in the morning to find it covered with bird droppings...or to find it baking in the mid-day heat! It's a nice extra service that pays for itself in a year and massively increases the value of your property. You may even find that your waiting list is so long that it's worth it to cover ALL your spots. In fact, covering all your parking spots at once is definitely the most cost effective way to do it, so be sure to ask your tenants, before you start, how many of them would be willing to pay extra for carports, have them sign a contract saying they'll pay extra for it, then build them. If you build 10 carports that generate an extra $50 a month each, that's $500 extra a month in income! Your carports will pay for themselves within the first year and the rest is pure profit for you. You can then use these carports as a competitive advantage over your competition...or you can team up with a neighbor and get a bulk discount rate on getting carports put in to both apartment complexes. This builds good will with your neighbor and improves the property value of the surrounding area.
6. Add Extra Storage Facilities
My sixth favorite way to massively increase the value of my multifamily properties is to offer extra storage facilities. I'll take extra, unused space somewhere on the property and convert it to physical storage for my renters. I typically charge an extra $25-50 a month for storage and they pay for themselves within the first year. This is such a great idea because everybody has too much stuff and not enough places to put it! Especially in an apartment complex...and those with families. By offering extra storage facilities, you make life easier for your renters because they no longer need to store all their stuff at their local mini-storage facility and your property looks less cluttered and clean which keeps your current renters happy and attracts new ones. By offering all these value-added services to your renters, you're making life so easy for them that they'll have no reason to leave!
7. Add Garages
My seventh favorite way to massively increase the value of my multifamily properties is to build fully contained garages for my renters. Like the Carport idea, I'll ask my renters how many would be willing to pay extra for a garage and how much they would be willing to pay for it. Once I have a complete interest list, I'll have my renters sign contracts that state they'll pay $50-100 extra a month once the garages are complete. I'll then convert their current parking spaces or convert their carports into fully contained garages with automatic garage door openers. The garages can be used to park their car in a safe, secure environment where they can never be, God forbid, broken into, dinged by neighbors or vandalized by youths. Plus, by adding a single shelf in the back of the garage, you provide your renters with a little extra storage space for their stuff. These shelves aren't as big as the Extra Storage Facilities discussed in # 6, but they do offer a place for them to put some of their kids toys so that your property grounds remain free of your residents stuff. The garages typically pay for themselves by the end of the first year and the rest is pure profit after that.
8. Maintain Your Property's Grounds
My eight favorite way to massively increase the value of my multifamily proeprties is to meticulously maintain my properties grounds. I hire gardeners that have experience maintaining apartment complex grounds and know what plants will require the least amount of maintenance, yet look the best for the lighting conditions throughout the complex. Keeping the grounds looking as nice as possible is so essential! By keeping a clean, professional look, you will attract a clean and professional clientele. These renters take better care of your property because they care about where they live. By having great looking, well maintained grounds I find that my renters actually pick up trash FOR ME! They move to my apartment complexes because of how nice they look and they want to maintain that look so they're willing to pick up a candy wrapper or used soda can from time to time. Plus, the nicer looking your complex is, the easier it will be to build up that waiting list that will cut your vacancy rates to almost zero! Be sure to do a competitive analysis of what your neighbors or competition do with their grounds and then one-up them. If they have a little plastic sign in front advertising their building, with some ivy around it, have a nicer sign created that is lit up at night (so you're always advertising) and have beautiful flowers planted around it. Remember, your target audience is ALWAYS women! Women like flowers and well maintained grounds. While maintaining your grounds is a must, by one-uping your competition, you make people want to live in your complex instead of theirs. With all these pluses to your apartment complex, I find renters have no problem paying an extra $20 a month for those beautiful grounds...which only cost me an extra $5 per unit to maintain.
9. Pick Up All Trash on Monday Morning
My ninth favorite, and by far the easiest way to massively increase the value of your multifamily property is to have all the trash that's been dropped on the ground picked up every Monday morning. You must have trash picked up at least once a week anyway, so you might as well schedule it for Monday morning. Why Monday morning? Because the trash builds up the most over the weekend (from your renters that cut lose on their days off) and because 80% of potential new renters look at new places to live Monday after work. You want their first impression to be that your property is the most meticulously well maintained and clean property out of all of the ones they've seen. This is so important because if they LOVE your property, even if they don't move in, they will most likely recommend your property to others they know are looking. I typically ask my gardeners to come by on Monday morning and pick up the trash at the same time they are maintaining the grounds. This first impression makes all the difference in acquiring new renters and building up that waiting list, which will cut your vacancy loss down to almost zero! This tip alone can cut your vacancy rate from 10% down to 2% which can result in several hundred to several thousand dollars in extra income per year.
10. Offer Cable and Wireless Internet Services
My tenth favorite way to massively increase the value of your multifamily property is to offer your renters extra services they want, like satellite cable and wireless internet service. Be sure to do your market research first by asking your current renters what services they would really like to have. As an example, what I like to do is sign my apartment complexes up for one DSL account at the highest speed available which typically cost $60 a month. I then have a local firm setup a wireless router to distribute the signal with WEP protection so only paying customers can get access. The setup costs are typically $200-300. I then charge my renters $5 less per month than the slowest speed DSL they could get costs. That way I'm providing them with FASTER service for LESS than they could get anywhere else! This idea alone brings in an extra $100-200 a month on my smaller properties (10-25 units).
Make Life Easier for Your Renters & They Will Make Life Easier For You
By offering all these value-added services to your renters, you're making life so easy for them that they'll have no reason to leave! You'll be amazed how your vacancy rates fall to almost zero and your waiting list just keeps growing! Your renters will glow about your property and how you've gone out of your way to make life easier for them. They'll rave to all their friends, family, coworkers, etc. which will make other people want to live in your property as well. In fact, I find most new renters want to move in to be closer to their friends and family that are already living in my properties. I give these renters highest priority as I know that renters will stay even longer if they have friends and family living down the hall.
In doing all that I've recommended, you'll raise your property's value massively AND you'll raise the surrounding area's property values which they will thank you for. By caring for your renters, they will care for you and your property. That's the beauty of Karma.
Thank you very much for using our service and good luck in all your real estate investing endeavors!
P.S. If you've got another way to MASSIVELY increase the value of your commercial property that you'd like to share, we'd be glad to hear about it. Please drop us an email and we'll be sure to reward you for your contribution.