A key part of my Real Estate investing success has come from creating equity in my buildings. I have done this by creating new revenue streams, making improvements to existing units and decreasing overall expenses.
When I complete my income statement analysis, I look at and consider the following:
Can I separate the utilities from an all-inclusive rent?
Hydro is the most important to carefully review, many times hydro is abused by tenants when the landlord is responsible for the bill – and the expense will increase annually.
Is there additional parking or storage that I could lease out in addition to the base rent or can I create additional parking spaces on my lot or storage units within my building?
Is there additional space within the building that I could use to increase the size of an existing unit – Let’s say take it from a 1 bedroom to a 2 bedroom?
Is there additional space that I could use to create an entirely new unit? (check zoning first)
Does it make sense to add an addition to the building?
Could the existing units benefit from upgrades or renovations?
Review the existing marketplace before renovating to understand what the top of the market is and what level of finish you will have to complete to get there.
Review Insurance costs annually and get multiple quotes
Review any leased equipment leases and consider terminating the contract, buying the equipment outright instead – this will take the equipment off of your expenses, create more cashflow and provide the bank with a more favourable picture should you want to leverage the property.
If you currently own rental property consider these options to improve your cashflow and increase your equity. Contact me if you want to talk about how to implement any of these strategies or to start a search for your next Real Estate investment.
Happy Investing!
Derek D. Wacker