Owning an apartment building is often a fine way to earn steady cash flow, but there are ways to boost your income without spending a lot of cash, as we outline below.
Boost Rents
The most straightforward way to boost your income is to raise the rent. This can be easier said than done in some cases. But you and your property management team should always be studying the market to find out when you can justify increasing the rent.
If the rents for your apartments are less than average for your area, why is that? Maybe you haven’t kept on top of rents for the neighborhood? Or perhaps the condition of the other properties is better?
Before you purchase the apartment building, think about your game plan to boost rents over time. For instance, you may decide that you need to paint the lobby, install new awnings outside, and enhance the landscaping.
Simple improvements such as these can justify increasing the rents.
Lower The Water Bill
Many landlords cover the water bill. But these tend to creep up in apartment buildings because of drips and leaks.
The best way to find those costly leaks is to ask your tenants to report them as soon as they see them. Also, check for leaking water and drips any time you walk your apartment building. This issue is one of the first things to look for when you or your property manager performs rental inspections.
You also can cut your water bill by putting in low-flow showerheads, faucets, and toilets. Yes, you’ll need to spend upfront, but the savings every year are worth it.
Lower The Heating Bill
If you also cover heat, this one can be tough to control. Tenants tend to overuse what they don’t pay for; ever walk into an apartment and find the heat blasting with the window ajar? This is a great reason to avoid purchasing a property where you must cover the heat.
But if you already own the building, install programmable thermostats in each unit. Sure, the tenant can alter the program, but most don’t bother because those things are hard to figure out the first time.
If you set the thermostats to EPA standards, you can save plenty of money every year.
Cut Paper Costs
Technology advances offer many opportunities to trim our budgets. For example, you can store many necessary documents on hard drives or in the cloud. It might seem like pennies, but you can save hundreds of dollars per year by going paperless.
You can speed this process by giving your tenants the choice of opting out of paper rent forms and other paperwork. And you don’t usually need to keep paper copies of all documents going back years anymore.
Put In Laundry Facilities
Some landlords underestimate the income from laundry facilities. But take a look at the numbers for one washer and dryer:
- Assume that every unit handles two laundry loads per week.
- One load for the washer and dryer costs $1.25 each, for a total of $2.50. That’s $260 annually.
- If you have 10 washers and dryers, you added $2600 to your bottom line for the year, which could increase the value of your property by $26,000 if you have a 10% cap rate.
Improve Office Efficiency
How many employees does your building have? Can you consolidate any of their duties? How efficiently are they working?
Office salaries are a considerable expense, so it can save a lot if you evaluate your job descriptions regularly.
Spend some time in the building and watch how your staff works. You could discover that some jobs could be combined, saving you thousands in yearly overhead costs.
When you use the tips above on your building, you can start saving money quickly!