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Opportunity knocks: Proven methods to maximize your property investment
August 2010
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| Lorrie King, Partner, Deloitte & Touche LLP |
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By Clare Tattersall
Owners of apartment buildings are responsible for a very valuable asset: income-producing property. Their goal is to preserve this real estate asset and increase the financial worth of it over time.
Lorrie King, Partner, Deloitte & Touche LLP, says there are three main ways to add value to an existing apartment building.
“You can increase your revenue, decrease your expenses or decrease the taxes that you pay,” she says.
According to King, the most desirable (and traditional) approach to increase revenue is to decrease vacancy rates. The best way to do so is to develop a stable tenant base. Creating a better sense of community in a building through a number of resident events and simply investing in inexpensive improvements will go a long way to making tenants happy.
“Every time a unit turns over you have to increase your decorating (and) leasing costs and, if the unit is empty for even a month, you increase your occupancy losses,” she explains. “So, sometimes the cost of a new fridge or a new paint job to keep your tenant in place is well worth (it) because it’s much cheaper than turning over a whole unit.”
There are other less traditional ways to generate more revenue that are proving to be highly effective. These include offering advertising space for local businesses, leasing the building rooftop to solar energy proponents and renting unused underground or at-grade parking spaces to a third party.
“Now (there’s) the ability to sell that third party revenue stream on a one-off basis to parking specialty companies,” says King.
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