Our top tips are designed to increase your property rental value. Start by performing strategic community upgrades. From here, you have a variety of other tools and tactics available to help you.
1. Perform Strategic Community Upgrades to Increase Property Rental Value
Multifamily communities are always looking for the next big thing; the one that will boost property rental value and lead to larger profits. Having this type of mindset is all the more critical in competitive markets. The fact is that consumers demand improvement in most if not all of the products they consume (just consider how words like “new” and “improved” are used to sell just about everything).
For multifamily communities, improvement comes in the form of strategic upgrades that are made throughout the property. These strategic upgrades keep residents happy and multifamily communities profitable.
Most importantly, community upgrades increase the property value of multifamily properties.
There’s one catch though: multifamily communities need to be sure that they are making the right ones.
2. Invest in Smart Technology
So how do you know that the upgrades you will be making will be worthwhile to residents?
Looking at the data is a good start.
Here are some stats on what residents are willing to pay more for.
A survey conducted by Entrata found that more than three fourths of residents would pay more for a package of their top three smart home amenities, with 57% of residents willing to increase their monthly rents by at least $20.
It’s easy to see why. This is because smart amenities like keyless entry and smart package management bring added efficiency and convenience to multifamily communities and their tenants.
So if you are looking for a new flavor for your multifamily property, look no further than performing strategic community upgrades centered around smart technology (the financial returns you get back will be anything but “vanilla”).
3. Consider Smart Tech Packages Designed to Increase Profits
While these smart tech packages can be fully customized to best increase revenues for your community, the Arize standard package of smart tech products aims to have you break even on your investment in only 19 months. By breaking even, we mean in terms of the money that you would have spent to cover the cost of equipment. From here, you can expect to see a great increase in your property value, as well as your annual profit—around $30,000 is our most conservative estimate.
Multifamily communities across the country are taking advantage of a zero obligation 90-day trial period from Arize.
4. Spread the Word About Your New Smart Apartment With Savvy Marketing
When they have something great to offer, savvy businesses let their audiences know through marketing efforts that are just as savvy. Remember, since we already know that residents are demanding them, marketing your new smart amenities will not be a hard sell!
By broadcasting your coveted smart amenities, your audience will start to see your community as a premium place to live—which they will now pay more for.
The result will be increased property rental value and unit marketability.
If you own a small multifamily property (20 units or less), there are a variety of strategies that you can implement to help increase rental value.
Points #5 and #6 are just for you.
5. Lower Your Monthly Mortgage Payments to Increase Property Rental Value
Rising interest rates can hurt your cash-on-cash returns; as properties are often valued based upon their income-earning potential (with cash-on-cash return being one metric that is used to evaluate income), high interest rates also affect your property rental value.
To keep their interest rates low and property values trending upward, property owners make use of various financial tools. One of these is an adjustable-rate-mortgage (or ARM). ARMS typically carry a lower interest rate—which are only fixed for a finite period of time (5, 7, 10, and 15-year ARMs are the most common, according to Trion Properties). After the fixed period, the interest rate can float up or down based on the interest rates at that time.
Other financial tools designed to check rising interest rates include Libor caps or interest rate swaps. Owners who purchase Libor caps either 1) have their floating rate loan fixed or 2) cap interest rate increase at a certain level.
6. Hire a Property Management Company
In times of flat property and flattening rents, property managers can be your ace in the hole by helping to grow your asset value.
This is because a property manager’s responsibilities include accounting and implementing methods of maximizing operational efficiency. Property managers (or PMs) also create reports to ownership; these reports are filled with critical information like rents paid and owed, maintenance costs and payments made, balance sheets, and more.
The bottom line is that hiring a talented property management company can add value to property assets to boost your property rental value.
7. Be Pet-Friendly (to a Point)
People have always had a preference for pets—and this preference does not diminish once they begin renting. If anything, residents want to bring their cats and dogs with them to their new rental. By choosing to be pet-friendly, multifamily communities make their properties more attractive to a larger group of people. This, in turn, will help you to increase your property rental value (as it will be stocked full of rent-paying pet lovers).
By requiring extra fees like pet rent and pet deposits, you gain more cash while also offsetting any potential damages.
8. Increase Rentable Square Footage
Making money from apartments depends on filling your units with paying residents. You can earn larger profits from these paying residents by adding to the amount of rentable square footage available for them to pay for. This means expanding the available square footage within your existing units.
We know what you’re thinking: hasn’t the architect who designed my property already maximized my property’s amount of rentable space?
Not necessarily. This is because inexperienced or rushed designers can design properties in a way that is economically viable (for them), but a money loser FOR YOU. In fact, in both small and large apartment complexes, the loss of rentable square footage due to excessive wasted space, poor product, and inexperienced designers can have a sizable effect on the financial return on your investment, according to Multifamily Executive.
By updating the work performed by your property’s designer, you can get the most value out of your multifamily property’s rentable space.
9. Earn Favorable Reviews to Help Manage Your Property’s Reputation
Never has word of mouth held as much power as it does right now. This is because online review sites like Apartments.com and Zillow.com serve as critical information hubs, influencing renters on important decisions like whether or not to rent from a particular property.
To earn and maintain a stellar reputation, successful multifamily communities of the future will have to work hard to 1) increase their online appeal or 2) maintain it. Communities that do this well will see a boost to their perceived (and actual) property values.