Are you charging the right rent for your rental units?
Every rent check that you collect in pays for your building and business expenses and what's left is the profit for your business. If you are managing your buildings yourself, then that profit represents compensation for your labor in managing the business and buildings. You are trading your time for potential profits.
[By the way, have you calculated lately what your business pays you per hour of your work? If you haven't, it can be eye opening. Take your net cash flow (profit) for last month, and divide it by the REAL number of hours you worked on anything related to your buildings during that same period of time. Are you getting paid what your time is worth to you?]
A client contacted me recently and asked if I would help him improve his rental strategy for his portfolio of buildings. We'll call him Mike (not his real name). Mike has 3 buildings totaling 22 units. He manages them himself with caretaker and handyman help. Mike has some great systems in place to simplify his management process. But, Mike wondered whether he has been charging enough rent to keep pace with the local market. So he set me a information about his unit and building types (square feet, pictures, condition, location, etc.) and I did a rental analysis for him. What I found surprised him. Mike's rents were on average about 15% below market averages for the area. After reviewing all the information we created a plan to increase his rents over a reasonable period of time. That 15% - 20% increase will go directly to his bottom line profits because his expenses do not need to increase. For Mike, the increased profits could add up to about $2,000 per month MORE cash flow in his pocket from his rental business.
If you or someone you know would like to find out if your rents are in line with the market, or if you want me to do an objective, confidential review of your building's performance, call me today, I'll trade you the information for a breakfast meeting to get acquainted.
Onward and upward!
Doug Grimm is a licensed real estate Broker in the state of MN, and is the founder of Investment Property Advisers, and has been helping clients buy and sell investment properties for nearly 15 years. Please call to introduce yourself if you would like Doug to help you with any of your real estate needs.
OFFICE (651) 489-3322