How To Increase Profits On Your Apartment Buildings By Tony Seruga, Yolanda Seruga And Yolanda Bishop At Isnare.com Ezine Articles

If you are investing in apartment buildings, no doubt you will want to know how to make the most money possible with your investment. You need to understand how to properly manage your property if you are going to increase your profits. It is also critical that you know how to decrease what you spend and increase the value of your apartment buildings as well. If you happen to be a new investor, you may want to look for a mentor that can help you out with your first property, or you may even want to join an investment group in your area as well. So, if you want to increase profits on your apartment buildings, the following are some helpful hints that will be of great use to you.

Managing Your Apartment Buildings

First of all, if you want to increase profits on your apartment buildings, you will need to learn how to properly manage your property. There are two different types of management that you can choose from. You can choose to hire a management company to handle the management end or you can actually manage the properties yourself. Usually if you are a new investor, you’ll want to find a property that is not too far from your home or office so you can manage your property on your own. Managing the first properties yourself will help you learn what will work and what won’t, so later, if you do hire other managers, you will be able to manage them effectively. However, if the apartments have a very strong NOI and you can afford to hire someone else to manage the property for you, then you will want to set up meetings with them so you can learn and understand the managing process.

Increasing Your Profits

If you want to increase the profits of your apartment buildings, there are usually only going to be three ways to do so. You can increase the amount of rent you charge per unit, you can work to decrease the amount of your expenses, or you can increase or maintain your profits by keeping the level of vacancy between 3-5%. If you have a higher percentage of vacancy, then you’ll need to work hard to attract new tenants. On the other hand, if you have a vacancy percentage of less than 3%, then the rents you are charging may not be high enough.

Considerations When Dealing with Rents

When you are dealing with rents, there are several things that you’ll want to consider. First of all, when you increase your rent, you will want to be aggressive with the increases. You should work to be within the top 5-10% of the rents in the area. If you are going to increase the rent, then a great time to do so is when you have an empty unit that you want to fill. The yearly anniversary is another great time to increase the rent, since most tenants actually expect this. Usually a small increase of between $15 and $25 is reasonable, and while the tenants may not be overly happy about it, they probably won’t move out because of that small increase. When you increase your rents, not only will your increase your cash flow, but you’ll also be increasing the value of your property as well.

Control and Decrease Expenses

Controlling and decreasing your expenses is another way to increase your profit on your apartment buildings. Getting several bids for expensive jobs can help you save on maintenance and repairs. Also, it is important that you don’t avoid making repairs trying to keep your costs down. This can actually decrease the value of your property or cause your tenants to leave, so always make the needed repairs on the property.

Tips for Reducing Expenses

The following are a few tips that can help you reduce your expenses so you can increase your profit.

Tip #1 – Make tenants pay for maintenance or repairs that are their fault, but make sure the rental agreements state that.

Tip #2 – Get several different insurance bids a couple months before you renew. You may be able to save on your insurance.

Tip #3 – Install incandescent lighting in the hallways and put up motion lights in common areas of the properties.

Tip #4 – You can install showerheads that will help you save water and faucets that are water saving as well.

Tip #5 – If you are paying the heating bill, have a controlled thermostat installed.

Tip #6 – All common lighting on the premises should be on a timer.

Tip #7 – Have a tenant help to watch the place for you and handle small maintenance issues. This will help them treat the place with more respect and they’ll be a big help to you.

All of these factors are important to know when trying to increase the profits on your apartment buildings. Following these tips will not only help you maximize your profits, but will help you to increase the overall value of your properties as well.

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