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 .08 it means they want a net return (before loan payments and taxes) of 8% on the purchase price. So if your three-plex generates $12,000 net income annually, they’ll value it around $150,000 ($12,000 divided by .08). If you can make it generate $16,000, you make it worth $200,000.
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 $60 below the going rate, you can raise the rents and not lose your renters. Increasing the rent $60 for three apartments means $2160 more net income annually. With a .08 cap rate, you just added $27,000 to the value of your property.
There are other ways to raise rents. Maybe...
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