| Selling real estate rentals isn't like selling houses. You | | | | months = $1080 divided by a .08 cap rate = $13,500) If |
| can paint a house, and get a little more because it | | | | you can build that carport for $4,000, that's a good |
| looks nice. Rental properties, especially larger ones, are | | | | return on investment right? What else do they |
| different, because they're bought by investors, who | | | | want?Higher rent isn't the only way to get more |
| look at income more than new paint. Raise the income, | | | | income. Storage sheds can be rented to tenants or |
| and you increase value to investors.Time to learn | | | | you could put in a coin-operated washer and dryer. |
| about capitalization rates. If investors in your area | | | | With a larger income property, you could install pop |
| expect a capitalization rate of .08 it means they want | | | | machines.Reduce Expenses Of Real Estate |
| a net return (before loan payments and taxes) of 8% | | | | RentalsCould you add insulation to reduce the heating |
| on the purchase price. So if your three-plex generates | | | | costs? If you're paying $80/month for lawn care, will |
| $12,000 net income annually, they'll value it around | | | | one of the tenants do it for $40? Could you buy |
| $150,000 ($12,000 divided by .08). If you can make it | | | | cheaper insurance? Any way you can reduce |
| generate $16,000, you make it worth $200,000.More | | | | expenses raises net income (unless it scares away |
| Income From Real Estate RentalsRaising rents is the | | | | tenants). A new $4,000 furnace that saves $800/year |
| obvious way to boost income, if you can justify it. See | | | | on heating costs means you just turned $4,000 into a |
| what similar units are renting for. If your units are $60 | | | | $10,000 higher sales price.This isn't an exact science, |
| below the going rate, you can raise the rents and not | | | | and of course appearance and other factors matter. |
| lose your renters. Increasing the rent $60 for three | | | | Increasing that net, though, is the surest way to get |
| apartments means $2160 more net income annually. | | | | more for your rental properties. Make the changes at |
| With a .08 cap rate, you just added $27,000 to the | | | | least several months before you try to sell the |
| value of your property.There are other ways to raise | | | | property (a year before, if possible). Also, learn how do |
| rents. Maybe your tenants will agree to $30 more per | | | | the math - it really does matter with real estate |
| month if you have a carport built. That's $1080 more | | | | rentals.Steve Gillman has invested in real estate for |
| net income annually, meaning roughly $13,500 more | | | | years. |
| value added to your property. ($30 x 3 units x 12 | | | | |