Net Operating Income And Adding Significant Value To Your Property

The net operating income or NOI of a property is a crucial aspect of selling it at a good price. Every property owner wants to implement strategies which will help them get some additional benefit in terms of net income.

In the real estate investment space, Net Operating Income is essentially the amount of income collected from the investment property after subtracting the operating expenses as well as vacancy losses. A real estate investor will always look at a property’s NOI to determine if it’s a good investment.

Real estate managers don’t find it very challenging to hit the required numbers during the summer months. It’s when there are a large number of tenant tours and new leases. However, during the off peak season such as wintertime, new leases, and tenant traffic can be at an all-time low.

Tips to Add Value To an Investment Property

If you are an asset manager trying to combat the winter lull in real estate, there are certain profit-generating strategies you can explore:

Increase the Rent

While this may seem like an obvious solution, you need to be very careful about how much to increase the rent. It important that you know what the market rent is and then compare yours to similar properties in your area. You can also ask local brokers and property managers what they have seen in terms of market rent. While increasing the rent, weight it with the possibility of needing to replace the tenants as well as the cost of the turnover. Sometimes, even very minor improvements can make a higher rent more palatable to tenants.

Reduce Your Expenses

Go through all your expense statements over the past three years. This would give you a better idea about where your money is going. It is important to look for strategies that can help you reduce your utility bills. Replace traditional light bulbs with energy-efficient ones. Install thermostats; these can significantly reduce your cooling and heating costs. If you are able to prove cost savings (even when your units are metered separately), you would be able to charge a higher rental. You can also focus on preventive maintenance as it can save you a considerable amount of money on repairs.

Focus On Improving The Aesthetics Of The Property

Just as it is important for property to be well-maintained, it also needs to be aesthetically appealing. Sometimes the simplest of upgrades such as replacing kitchen cabinet doors, faucets & hardware can make the units look and feel more modern. Stripe the parking lot, improve the landscaping, add some new exterior lighting and improve the signage. Make sure that the units are thoroughly clean when showing them.

Following these steps can go a long way in improving the chances of attracting new tenants. It can help you increase your NOI annually by at least 10 percent or more. Having a higher NOI also increases your cash flow and ups the market value of the property.

Whether you’re looking to buy or sell in the Kamloops area, for a greater probability of success you need a dedicated professional. I can guide you through the process and be counted on to protect your investment!

Categorised in: Kamloops, Real Estate, Sellers, Sellers

This post was written by kamloopshomesearchcom