How to Increase Your Return on Investment for Apartment Real Estate
There are many different ways to generate a return on investment for your real estate, but starting with your current apartment syndication could be a relatively simple way to generate some additional money. Here are a few ways to help you increase your profit, as well as the investment property value.
Keep Turnover Low
One of the best ways to ensure that you are getting a successful return on investment (ROI) is to make sure that you keep turnover low. As an investor, constantly losing renters and bringing in new ones increases costs in a variety of ways.
When a tenant moves out, you must then clean and repair the property to ensure that it is up to date. This means painting, repairing minor damages, and overall clean up to prepare the apartment. In addition, you must assume any advertising costs associated with listing the property in order to find a new tenant. All of these costs can quickly add up. By keeping turnover low, you not only minimize your costs, but also help to create steady income. Having high-quality tenants is another key aspect of keeping turnover low. The right tenant will pay their rent consistently and also take care of the apartment.
Another way to increase the return on investment for real estate deals is to gradually increase the rent for long-term tenants. But, before changing the rent, be sure to do a full cost-benefit analysis to ensure that you are raising the rent by the correct amount. There are a variety of websites available today to check rent prices in your area and compare properties. It is also incredibly important to look at the market and discover the current trends across the industry so you’re staying competitive.
Another great way to increase rent is to coordinate maintenance to the buildings and related facilities with increased rent. Maintenance is an important part of sustaining your investment property value while also creating additional value for your tenant. For example, if you are planning to replace one of the appliances in the kitchen, it could be a good idea to coordinate the replacement with lease renewal so that your tenant can see the value in the additional cost.
Charge Late Fees When Necessary
Having tenants who pay consistently and on time is an important aspect of any apartment investment. At the end of the day, your tenant has signed a contract and it is your job to ensure that all transactions are done on time and according to the lease. If your tenant pays rent late, then you are entitled to charge a late fee. Late fees allow you to make additional revenue but also encourage your tenant to pay on time. Not charging could mean that your tenant learns it is okay to pay late or that they will get away with it. Always charge a late fee when necessary to ensure timely payment.
Have Multiple Revenue Streams
Having additional services that you offer is another way to generate additional revenue from the property. For example include cleaning, laundry, or landscaping services that you offer to your tenants for a fee. You can then work with a contractor so that you are able to make a profit. For example, you can hire a cleaning service to come and clean the apartment for $65 every month while charging your tenant $100 for the service. This increases your revenue by $35 every month or $420 every year per unit! Whatever the needs of your residents, see if there is a way for you to offer an additional service to help generate profits and keep tenants happy.
There are a variety of ways to not only increase your real estate profit but ultimately maintain and improve the value of your investment. To learn more about return on investment real estate and investment property values, check out my blog, which focuses on giving you the information and tools you need to become a successful real estate investor.