Selling Your Property for Maximum Dollars
Are you a real estate investor hoping to sell your property for the most money possible? There are ways to manage your property that will get you the best profit while you own in and when the time comes to sell. If you incorporate some of these tips, and make sure that you target the right profit centers and ratios, you will be able to increase your sales price for your property. Here's how to start optimizing your property for the most profit.
Improving the amenities in your building will create a higher value. There are several different ways to quickly add value without a lot of expense. Installation of laundry machines in residential buildings is one popular option. If you choose to use coin-operated laundry machines, you'll also improve your income. That increase income versus expenses will affect your cap rate, or capitalization rate, and allow you to increase your sales price for maximum profit.
Other amenities that can be added to greatly raise the value of the building are parking, storage, and improvements to existing facilities of this type. A roof over your parking lot, or more space for cars can mean your building has a much higher perceived value. You can also install vending machines or video machines in communal rooms, like the entryway or laundry room, pay phones just inside the door or in the lobby, and services, such as wash and fold options. Consider babysitting services for tenants, too. All of these services can affect your income and make a big difference in what your building is worth at sale time.
You can make more improvements on larger buildings to increase building value, since these sources of revenue - laundry, parking, etc. - will provide more income. It's important to keep your building size in mind when you decide to add value through improvements. Sometimes, the expense of adding amenities to smaller buildings will increase your sales price and profit upon selling. In larger buildings, however, the investment is usually smaller for the amount of value received. A good rule of thumb is to only use this type of improvement for buildings with more than ten units.
So, what do you do to increase your sales price in smaller buildings? Raising rents a little - but not so much that tenants will be inconvenienced - is one of the most common strategies used to increase income and profit. Increasing your income directly affects your cap rate, which in turn increases the sale price of your property. The lower the cap rate, the greater your property's perceived value. If you have a building with multiple units, a tiny increase in income, such as just ten or twenty dollars per month, will affect your cap rate and increase your profit.
Of course, there's another side to a good cap rate, too. It's all about the ratio of expense to income. If you manage to reduce your expenses, you'll have a lower cap rate, and thus be able to increase your sales price. Consider installing water saving devices on all sinks, showers, and toilets if you pay the water costs for the building. This can be as complicated as installing new water saving toilets, or as simple as putting a brick or gallon jug full of gravel into the tank.
Raising rents, raising income through extra services, lowering expenses and adding value to your building are all good strategies to use. Incorporate as many of these strategies as possible to increase your profit, increase your sales price, and sell your property for maximum dollars!
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