Income properties must be managed like a business. The goal is to increase the property’s revenue while decreasing its expenses. Real estate investors want to increase the economic value of their properties, which results in an increase in profit.
Here are five easy tips to increase the value of your properties:
Tip #1: Renovate Your Units
Your units’ appearance will strongly influence a future tenant’s decision as to whether or not they want to live there. To them, there is a huge difference between an outdated unit and a freshly-renovated one. Thus, it is important to make sure that your property and its units look good.
The renovations can be strictly aesthetic like painting the walls; changing the flooring, the light fixtures, and the door handles; replacing the vanity unit, etc. It could also be larger scale renovations, such as renovating entire rooms or opening up living spaces. To discover six great ideas to increase the value of your units for less than $1000, read this article.
Before renovating your units or your building, you should assess the return on investment (ROI). In other words, you will determine the potential rent increase that could ensue once the renovations are completed.
You should also know that the Tribunal administratif du logement does not allow you to increase your rent unreasonably. Thus, you should talk with your tenant about the renovations before you start or wait until they move. You can also consult the Tribunal’s calculation tool (French only) here.
Remember that this tool does not benefit real estate investors. If you are honest with your tenants about the renovations, you could agree on a rent adjustment that would lead to a quicker ROI.
Tip #2: Exploit the Hidden Potential
Some buildings have a lot of hidden potential. Indeed, many properties have spaces which are not highlighted or exploited, such as an unfinished basement or a spacious unit that could be split into many smaller units.
For example, you could finish your basement and offer storage space to your tenants for an additional monthly fee. If a part of your property is unoccupied, why not add a shed? You could make this space available for a tenant with larger belongings.
Thus, by using the space to its full potential, you can make a greater profit on your income property.
Tip #3: Reconsider Your Service Providers
By lowering your fixed annual costs, you can increase your net income. Service providers often raise their prices annually, which means that you should pay close attention to the rate and try to negotiate it every year.
Contact your basic service providers to save a few dollars. Consider talking to these providers:
- Snow removal;
- Janitorial service;
Tip #4: Offer More Services to Your Tenants
As well as offering your tenants additional storage space by maximizing your free space, you can provide them with other services, such as Internet, a laundry service, an extra parking space, air conditioning, appliances in the unit, etc.
Depending on the type of tenants you have, you could even offer a home cleaning service; however, this is more common in newly built co-ownerships rented to a higher income clientele.
These services can be included in the monthly rent or be paid separately.
Tip #5: Lower Your Energy Costs
Unlike your insurance and your maintenance costs, you cannot renegotiate your electricity, natural gas, and heating oil rates. Nonetheless, you can always try to lower your consumption.
To improve your property’s energy efficiency, you can make a few small changes, which can save you some money, such as:
- Installing LED light bulbs;
- Caulking the windows;
- Changing the doors and windows;
- Improving the building’s insulation;
- Switching your oil heating system for a natural gas heating system;
- Switching to an electric heating system and put the bill at the tenant’s expense;
- Controlling the temperature in the common areas;
Know that the government offers tax credits to make your home more energy efficient, so we recommend that you learn more about the available credits.