“The secret of change is to focus all of your energy, not on fighting the old, but on building the new.” — Socrates

I’m currently working through a repositioning plan on a building of my own right now, and it’s a good reminder of something I tell owners all the time: rent increases alone rarely get you where you want to go. Real value comes from actively reshaping the income the building produces.

Here’s the criteria I’m using:

LOOK AT YOUR UNIT MIX FIRST. Sometimes the biggest opportunity isn’t raising rent on what you have — it’s changing what you have. Converting underused space (a patio, an oversized layout) into an extra bedroom or a second unit can move the needle more than any annual increase.

HANDLE TENANT RELOCATIONS WITH CARE.  If a long-term tenant needs a different situation, take the time to find them the right fit rather than forcing a fast turnover. It’s the right thing to do, and it keeps the project moving without unnecessary friction or vacancy.

MODERNIZE WHAT RENTERS ACTUALLY PAY FOR. In-unit laundry, mini-splits, dishwashers — these aren’t just nice-to-haves anymore, they’re often the difference between market rent and below-market rent.

RUN THE NUMBERS BOTH WAYS. Know your current NOI and expenses cold, then model what a buyer’s numbers would look like on the other side of a sale — especially property taxes, which reset at a new purchase price and can catch owners off guard when comparing “my numbers” to “a buyer’s numbers.”

The particular building I’m working on right now is projected, using comparable local rents, to go from under $17,000/month in gross income to a projected target of $21,000 per month once the plan is complete — without adding a single new unit or an ADU.  We are simply reconfiguring what was already there.

 

If you’re sitting on a building that feels “maxed out” on rent, it might not be. Happy to take a look at yours and talk through where the upside might be hiding.

“To improve is to change. To be perfect is to change often.” Winston Churchill

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 45 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.