Adding value to multifamily real estate investment properties

May 20, 2021

Real estate investing and owning multifamily rental properties can be beneficial because of the opportunity to generate consistent monthly cash-flow, and then the opportunity to add value through strategic improvements to the property. These improvements can result in increased cash flow, and the profits can be realized through a refinance or sale of the property.

Multifamily properties are valued largely based on the income that they generate, as opposed to single family homes that are valued based on comparable properties. That is why using specific strategies to increase income or decrease expenses is the focus for multifamily owners.

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Increase Rent on Units

One of the easiest ways to add value to a multifamily property is to simply raise the rental rate on the units. It is important to monitor what market rental rates are to make sure that you aren’t charging below market rent. The one issue to watch out for here is rent control regulations which may limit the ability to raise rents. Otherwise, even current tenants can have rent increases when they renew their lease.

Maximize Occupancy

A building that has experienced poor advertising or property management may have low occupancy rates. Too often, properties can be mismanaged resulting in too many vacant units. Through successful property management, finding the right pricing per unit, and ensuring a smooth application process, you can maximize occupancy in a multifamily property and ensure you are maximizing the overall value.

Improve Rent Collection Performance

Rent collection being on time can minimize risk and keep cash flow consistent. While there may be obstacles to collecting rent in person due to the recent COVID-19 pandemic, there are steps that can be taken to minimize these obstacles such as accepting online rental payments. Renting to tenants that have demonstrated a history of paying rent in full on time allows you to maximize the rent you collect.

Add Units

Adding to the unit count is a way to increase both income and value. This can be done by reconfiguring units and/or adding new buildings to your investment property.

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Improve Reputation & Online Reviews

Having positive reviews of the building and the property management online can help improve your reputation, and in course, your property value. Providing incentives to current happy tenants can be an easy way to achieve this. If you have a property with a great reputation, people will want to live there, keeping occupancy and overall property value high.

Physical Improvements

All details from better signage to improvements like a new roof, upgrading appliances, or adding an air conditioner can all add value to your property. Even making minor improvements like new paint, flooring, or countertops can make units more attractive to tenants, creating an opportunity to raise the rents on the property.

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Westbow Capital

Westbow Capital looks to apply all these principles across numerous markets in Canada, where properties are generating strong cash flow upon acquisition. We can leverage our experience in construction and property management to add value through renovations and operational improvements.

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