“The investor of today does not profit from yesterday’s growth.” Warren Buffett

The value of your rental units could increase without adding any square footage to your building. You may be able to reconfigure your units and create a more attractive unit mix by adding a wall.

WHAT IS RECONFIGURATION? Reconfiguration is defined by Oxford dictionaries as “The arrangement of parts or elements in a different form, figure or combination.” How does this apply to apartments? When potential tenants look at apartments, they are usually concerned with bedroom and bath count as opposed. to square footage. I have seen 800 or ever 1000 foot one bedroom units that rent for less than a smaller 2 bedroom unit.

WHAT TENANTS ARE THINKING. Tenants may need two bedrooms instead of one or three bedrooms instead of two because they have children, roommates or perhaps a family member who needs a separate room. A large living area is less important in such cases. Tenants rarely use a tape measure in deciding the viability of a potential apartment.

When you look at competing rentals, the size is usually listed as “large” or “good sized” but not a specific size. If they have a need for a two bedroom, they will filter by bedroom count and you as an owner of a unit with more bedrooms, may get the call instead of the housing provider with the 1000 square foot one bedroom unit.

NEXT VACANCY. Next time you have a vacancy, have your contractor look at the unit to see what would be involved in creating an additional bedroom or two from existing space. Your contractor can address permitting and costs to see if this could be a viable change for you. You can then do a rent survey to calculate potential additional rent you could be getting and divide your additional rent by the cost of improvements to see how many months it would take to return your investment. By doing this, you could increase your GROSS SCHEDULED INCOME, increasing the potential value of your building. By upgrading your unit mix, you may also make your building more attractive to potential buyers. Both of these could translate to more income now and additional dollars when you sell.

“Your talent is your floor, your character is your ceiling.” Cori Close, UCLA coach

What we at PRS PROPERTIES CAN DO. We can give you a good idea of the current value of your building. We can suggest changes you might want to make before sale to give you an idea what type of building you would be able to exchange into. You may decide to stay in the rental business or you may want to move into a more passive real estate investment, such as a triple net or a DSL.. We are always available to chat. We can give you referrals for professionals, such as lenders, contractors, and engineers, so that you can decide who you feel best with. We can supply you with rent and sale comparable in the area of your properties, so that you know what rental values are in your area. It is important that you know the true value of your rental units, so that you can get them rented right away at market value, or at least as much as possible with rent control restrictions. We can look at potential purchases that you may be interested in to make the property more desirable, and maybe look at potential issues that an insurer might require you to repair.

If you should decide to sell your building, we can help you exchange into a larger or smaller properties. We can even help you move into something with less management responsibilities. We can also help with getting the paperwork together for a refinance if that is your desire. We can also recommend experienced licensed contractors who can perform any repairs or installations you may need prior to selling. We can also look at your building for other easy and inexpensive changes that might allow you to get a higher value. We can help you to get the maximum value for your property, should you decide to sell, or the maximum return if you are planning to keep your building.

We are currently looking for “as-is” properties and are willing to purchase with low rents, deferred maintenance or even with a problem tenant in place. We can offer a 7 day escrow and all cash at closing. Give us a call. We have also put together numerous transactions over the years which involve properties that are not listed for sale. Many investors are currently in 1031 exchanges and need to identify a replacement property before their 45 day identification period runs out.

Should you decide to put your property on the market, we will put together an aggressive, targeted and professional campaign to get your property sold fast. We have been doing this for over 40 years, and we will use all the tools available to bring you the most dollars at closing. If you are thinking of selling or are just curious about the value of your property, don’t hesitate to give us a call.