043: You (and Your Apartment) Have Value
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We’re really excited about today’s episode because we’re tackling one of the most challenging parts of becoming a successful syndicator (also often referred to as operators).
When you’re starting out in this business 👉 it can be hard to know if you’re adding value to your properties. I mean, how do you really know what you’re doing is correct or even right?
In the typical corporate world, most people get reviewed once a year about their job performance. Are they meeting their goals? Are the KPIs being reached? What other areas of improvement need to be made?
And that’s pretty standard for most jobs. Now even though we don’t give each other reviews–
YET! Think of adding value to your apartments in a similar fashion. You’re making sure the properties you’re investing in are performing well, and you’re checking in on them and seeing if those assets are meeting your goals.
But, how do you know what works and what doesn’t? 🤔🤔
At the beginning of the process, buying real estate can be easy but buying large apartment complexes and managing them well takes expertise. That’s why a lot of passive investors who are already busy 😖 doing what they do in their genius zone don’t have time to figure out all of the details that come with adding value to the apartment.
They’re leaving those responsibilities up to the general partners, all they care about is the cash flow.
And we can’t blame them! So where can you find such incredible people, already living their lives and passively investing on the side? At the Kitti Freedom Club, of course! Here, you get access to all the insider scoop on investment deals worth your time without exerting too much energy. 🙌
You’re literally making money with your eyes closed. Seriously!
😌😌
Bringing it back to adding value, our job as general partners in 🏢 multifamily apartment syndication is to increase cash flow and ultimately increase the NOI, by either increasing income or decreasing expenses. And every apartment syndicator has their own version of doing what they think is best to accomplish both.
The combination of tactics we choose will make up our unique business plan for each property. And we are very transparent about what these plans are with our passive investors.
So today, we’re going to share the ways we add value to all our properties by increasing income and decreasing expenses. And, at the same time, able to maximize our passive investors’ returns. 💰✨
So let’s get started! 👇
#1: Mission No Vacancy
It’s not a secret that the best way to increase income is by having a full apartment, and limited vacancy is crucial to making that happen. Of course, life happens and people are always on the move. But, we have a couple of strategies that help us light up that “No” in front of the vacancy sign outside our apartment complexes.
Do not underestimate the power of marketing your available units. With the right marketing strategy, you will be able to fill spaces more easily and effectively. More occupants filling units means more rental income, this is the most obvious way to increase cash flow. We utilize websites like apartments.com or referral marketing to increase our occupancy.
Now, we have big heart eyes 🧡👀 around referral marketing and believe it’s one of the best ways to reduce occupancy because it’s all about word of mouth! It’s free and comes with the highest and quickest outcomes.
It’s a win-win for everyone. 😘😘 Here’s another pro tip: make sure your units are move-in ready so when the perfect tenant comes along all you have to do is make sure they’re leased up and ready to move in immediately.
#2: New Vocab– “Loss to Lease”
If this is your first time with us, know that we never keep anything to ourselves when it comes to apartment syndication 👉 we’re all about sharing what we know to make you a better and more confident investor. We know how it feels to feel like you’re stranded on an island with so much new terminology coming at you left and right. One of those terms is “loss to lease.”
But trust us, it’s not hard to understand. Loss to lease is a term used to describe the amount of money a property owner loses by not charging proper market rents.
Essentially it’s the difference between the unit’s market rate and the actual rental income agreed upon by the lease. Said another way: Basically, under-renting the apartment for what you can actually get for it.
This is typically seen when a property is taken over by a new owner and the previous owner did not keep up with the increase in market rates. However, there is a way to aid this and for us, the most clear-cut way to recover from this loss of income is by raising the rents at the end of each lease to stay on pace with market rates. In many scenarios, we find that though we have included the rehab upgrade budget for the unit, we are able to achieve the rent increase without doing any rehab upgrade to the unit.
#3: People Value Pretty
Coming up a number three, people love pretty things. That’s why new flooring, kitchen countertops, appliances, furniture, or even a fresh coat of paint 😉😉 can exponentially improve the value of the rental unit, thus allowing you to increase rents to match that value.
Think about it– you need a reason to increase the rent and oftentimes, new cupboards are all you need to make that happen.
Of course, there are situations where this may not be an option depending on space and the layout of the units. But if you have the means to be able to afford a washer and dryer for the unit, a non-negotiable for many renters, then the return of investment is well worth the cost.
Adding these small luxuries opens the opportunity to increase rents while also creating a more convenient living environment for your tenants. ❤️❤️
#4: Invest in Tech
Coming up on our fourth tip, you know what they say, home is where the wi-fi connects. 🖥️ That’s why including a tech package with wi-fi and cable in your rental units can increase the perceived value for tenants, and therefore increase the rental price without too much cost to you as the operator.
In this digital age, you can’t afford to have wi-fi.
One of the most humbling parts of our week is our screen time report.
In a similar fashion, tenants are increasingly tied to their devices, which means the presence of wi-fi is not only desired but expected these days. We’ve found many tenants are now especially willing to pay more for the convenience of not having to deal with the setup and management of their own internet or cable bill. 😎😎
#5: Water Control
At number five, is water control. 💦
Water is a huge energy resource and in terms of saving you money, look for ways to cut down on water usage. Since tenants are not often expected to pay for their water bill, it’s not likely they’ll cut back on water consumption on their own.
As the operator, you have to take control and lower your water bill by implementing water-saving solutions such as installing low-flow toilets and shower flow controllers. Speaking from experience, we have implemented water cost savings at properties we operate and have seen the impact on our bottom line!
#6: Get Smart (Locks)
Lastly, the sixth tip we have to increase your income and decrease expenses is by investing in a smart lock. Gone are the days of very loose-able keys. Instead, installing smart locks allows peace of mind and convenience for your tenants and your building overall. 🤩🤩
Plus, tenants can take control by easily adding a temporary code to give to friends or frequent guests access to their unit on their terms.
In Summary…
So, there you have it! Our method of increasing income and decreasing expenses when it comes to being an apartment operator. 😋😋 Like we said earlier, everyone has their own cocktail and method of how they prefer to make this happen. And some of those methods overlap, and sometimes they don’t. Regardless, our goal is the same– to get passive investors the most cash flow while they’re living in their flow of life.
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