“The money is thrown on the steps of the building and you don’t see it”
This is a sentence that we can say to quite a few entrepreneurs and investors who have purchased properties (mainly multifamily).
They spent so much time and effort making a purchase, some of them manage the property themselves, so this is also on their heads…
But – few know how to squeeze more profit from the property by some relatively simple actions.
This article will list 9 ways to maximize profit from a multi-family property.
Of course, everything written here – we carried out ourselves in our transactions and for the investors whom we accompany:
2 basic principles in every purchase and every property,
And we assume that they must always be performed:
1. Purchase below the market price – we will never buy a property at its full price
And we hope for a price increase. We make the first profit at the moment of purchase.
We will always get the property below the market price (how? This is already our specialty)
In this way we will also allow a high margin of safety (in case we need excess expenses
about the property below).
2. Purchase in an area with rising prices – we will look for a property in an area where we have not yet
Fascinated by the rise in prices, but the trend following it is clear. so that when we enter
For the picture we are actually already “riding the wave”, ahead of the price increase
and allow the property to reach her in full force, when it is in our hands.
After these 2 actions, there are a number of additional actions below
by which the value of the property will increase – regardless of the market:
3. Increasing the rent – let’s take for example a property that is managed relatively well but has been rented out
more than a year ago It is likely that the rent can be increased for the tenants
thus immediately increasing the operating profit.
Assuming the management was not good, the opportunity even increased – because the likelihood of potential not being exhausted
The rent is even more reasonable. So when we enter the building with our management company –
The game changes completely.
4. Increasing the percentage of occupancy – let’s say that the property was rented for 70% of the apartments in it,
And we raised the percentage of occupancy to 80%. The meaning in profits is understandable, right?
Again, the same thing – good management changes the face of the game and bottom line revenues.
5. Replacing the management company – as a continuation of the previous points – this is a necessary step that will allow
For us to enter areas where she did not touch or did not manage as required, and thus (rightfully) accept
Better value for our management.
6. Rebranding – When the neighborhood undergoes a change and upgrade, the rebranding will change
the building to a center of attraction for a better population.
For example: changing the name of the building, exterior painting, landscaping and more.
7. Operational improvement – reduction of excess expenses (something that will of course be checked even before the purchase).
8. Adding sources of income – such as warehouses, parking lots, laundry room, various machines and more.
All these are sources of income that can be added to the building.
9. Converting the building to a specialist in the type of population adapted to immigration in the area – for example: students,
Adults, government officials, medical professionals and more.
