Those who are thinking to purchase commercial real properties or to improve its worth, there are some of the things that they must do for enhancing & increasing investment value. Well, when searching for commercial property, you must check that a property has potential considering the historical data. Values of the commercial properties are driven in the form of cash flows generated by these properties. You must employ strategies that seem to be potent for decreasing expenses and increasing overall equity with increase in worth of property. In the following paras we have specified some of the simplest tips you can follow for determining the extent to which you can improve your cash flows.
MINOR YET EFFECTIVE IMPROVEMENTS
When you decide for making improvements, these could be kind of cosmetic improvement or some kind of substantial rehabilitation. Examples of cosmetic improvements are;
- New decorations for common elements
- Wallpaper changing
- New carpeting
- New improvements
- Changed flooring, etc
Examples of substantial include;
- Making structural changes
- Changing units by redoing
- Changing structural façade in case of shopping center
- Major renovation for lobby area of office building
Either way you would be increasing property`s value not only for tenants but also for your personal portfolio alike.
INCREASE IN RENT
Another way of increasing the property`s worth is to increase its rent to be taken form tenants. For this purpose you need to consider facts such as historical facts about property knowing whether rent is as per market rate. Another way is to be aware of changing’s in the surroundings and judging whether there exists potential for remarkable rental increase. Improvements made to property also justify the rent increase. Closely monitor both lower and upper levels of rentals for similar properties owned by other landlords and what rental they are receiving. This would help in not charging excessive price and remaining in the market.
REDUCTION OF EXPENSES
Assess historical operating information about the property. This is a good idea for determining area where expenses can be reduced. An example is to improve property with use of light bulbs i.e. energy savers that are energy efficient. This would help in drastic reduction to monthly electricity bills. Individual metering for gas connection will pass the expense to tenants. For most of the instances, owners of commercial properties can reduce expenses in a way that does not impact real estate operations.
CHANGE IN INTENDED USAGE OF PROPERTY
Sometimes, a change in the purpose of use of a property can lead to appreciation of its value. For example having an old warehouse located in a bustling center is an asset if you use it wisely. It can be converted from industrial warehouse to a hotel warehouse or office building some kind of condo building. It can also be used for other commercial purposes if you have a unique idea apart from conventions.
This list could go exhaustive and the last but not the least tip is to add some amenities to make it more valuable and appealing. Amenities must be value enhancing such as creating playground, cafeteria, playing room, free Wi Fi, day care center etc. all are amenities that people look for and admire.