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Enhance the Real Estate Property You're Selling
There comes a time during the course of any real estate investment when it becomes clear that selling off the property is the best course. When that time comes, getting the most out of your piece of real estate is crucial to seeing the big payoff at the end of the real estate investment experience that you have been expecting over the course of the investment, often many years.
Raise the Value of Your Investment Property
When selling your personal home, improvements like new landscaping and new interior work can net big benefits in a raised sale price. Investment properties are much different and going through those types of improvements are nice, but they will not add real value to a piece of real estate that is being investigated by potential investors.
Raising the value of your investment property goes beyond a coat of paint and is affected most by the cash flow that can be seen from that investment. There are two key ways to make an investment property increase in value in the eyes of a potential investor, increasing the income and reducing expenses.
When you raise the income seen by the property, you raise the value of your real estate investment property. While that can seem like a daunting task, there are some maneuvers that can be undertaken to make a property more attractive to investors. Raising rent is the most obvious way and while any raise comes with opposition by current tenants, if the real estate market justifies the move, it has to be made.
Many times landlords will get into a rental rut just to avoid a potential confrontation over a $30 per month increase. Getting over that fear can result in better cash flow, but only during times when the market justifies the move. If the market does not justify it, perhaps a few improvements to the property can.
Adding components that current renters want can justify a raise in rent that they will not bristle to. Raised rent not only helps cover the expense of the improvement, but adds permanent value to your real estate property that can be realized whenever you decide to sell it.
In situations where it may not be feasible to raise rents either because the market won’t allow it or renovations are not possible, reducing expenses is the best way to increase the profitability of a piece of real estate. Remember, an investment property’s sale price relates directly to profitability.
Many times, these types of steps take planning and time to recover expense. Adding better insulation to a property can save on energy bills and over time, it is possible the improvement will pay for itself. At the same time, you can charge more for your investment property because a reduction in energy expenses adds to profitability.
These types of moves are unique to each property and achieving lower costs on things like lawn care or snow removal may be more readily available in some areas than others. Do what you can within your limitations to reduce cost in anticipation of selling so that when the time finally comes, you can point to low expenses and high rent income as proof that you deserve a higher selling price point on your real estate.
Of course, in a perfect world you would be able to increase income and reduce expenses at the same time, giving you a much more attractive real estate investment that will command a better selling price on the open market.
More realistically, there are at least a few small steps you can take to enhance your investment property in anticipation of placing it on the market. Don’t let your real estate investment go out with a whimper. Work to get all that you can out of it to ensure a great return on what is often times a labor of love for your own piece of real estate.
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We respond right away! -Colleen Lane, Realtor®
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