Real Estate Rentals - Sell For More

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