An Idea to Increase the Bottom Line of Your Investment Property

by Bryce Beattie - Date: 2010-10-31 - Word Count: 503 Share This!

Are you pretty sure that you've already maximized the income coming from your property? If you've cleaned up and repaired your place and pushed the rents as high as the market will bear, then you might feel stuck.

Are you absolutely positive that you have minimized the expenses at your multifamily property as much as possible? Have you streamlined a work order system, found the most cost effective advertising venues, and negotiated with the yard care specialists, and now you don't know how you can possibly run the place any cheaper? You might feel stuck here, too.

So what else could be done? Is there any way left to increase the revenues or reduce the expenses?

Well, here are a couple of things to think about.

One way to increase the bottom line would be to add an income stream. For example, it may be possible build laundry facilities. You could also go to your city to see if there's a way you could build a few storage units, and tenants that have too much stuff could rent one. I've also seen properties that have a few garages available for tenants to rent separately. If you wanted to go high tech, you could bring in a fast commercial internet connection and then sell wireless connectivity. Yes, there are rules regarding any of these that you'll need to read up on before jumping in, but the point is clear - there are many possible income streams when you own rental properties.

Another way is to remove certain expenses altogether. This can be accomplished by either instituting a C.A.M fee, or by providing the mechanism for residents/tenants to pay given expenses instead of the owner.

The most common process for removing an expense from the owner and transferring it to residents is through submetering. For example; instead of the owner picking up the tab for all the electricity going into a property, individual meters could be installed and the individual residents would then have to pay for their own electricity. Of course this can be problematic when you first make the change. But things typically normalize very quickly. This change can easily be the equivalent of a 10 to 15% increase in rents. Once the change over has been made, the owner no longer has to worry about the cost of the utility. They just need to be concerned about maintaining the property correctly.

One big question regarding this plan is "How long does it take me to recoup my hard costs?" The answer is easy, just figure out the costs to install the meters, and then divide that by the money saved each month to learn how many months it will take to break even. Thereafter the savings are driven to the bottom line. In many cases this initial expenses pays off handsomely in yield and value increase resulting for a greater net operating income.

Like most things in this business, it's not rocket science. A little experience, a little motivation, and a little help go a long way toward meeting your goals.

Besides managing properties, Bryce works in the technology side of real estate, operating an online work order software as well as an online provider of utah real estate continuing education credits.n
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