Market value is almost always measured by the cap rate of the property. Net Operating Income (NOI) is used to determine your cap rate. The formula for NOI is: Annual Total Income - Total Expenses = NOI. Your challenge is to increase income when rents are at market value. Imagine consistently getting paid more than 100% of your rents every month. This could include late fees and daily late fees, but a Resident Chargeable Items List (implemented properly) is your magic pill. For example, charging $85 for a missed work order appointment, $8 for light bulbs, 1.5 month’s rent for breaking a lease, 125% of a fine issued by an inspector, $15 for damaged electric cover plates, $15 for extra keys, etc. Get creative! CREATE A RESIDENT CHARGEABLE ITEMS LIST
USE AS A SHORT-TERM RENTAL
Furnishing your rental property for hosting as a short-term rental will make your property more valuable. It’s no secret that one of the reasons why many of the top vacation spots across the country have exploded in value is due to the incredible cashflow that is possible with short term rentals. Although it requires a higher level of renovation, you can often see a 2-3x increase in rent from hosting on Airbnb. For example, my first rental would have rented for $1300/month but on Airbnb I’ve grossed over $3,000/month since inception, with my best month bringing in $4,200. The increase in cashflow not only allows me to invest in the property more, but it also allows me to invest in higher appreciating areas (A and B class markets) rather than only sticking with the riskier and entry level markets to achieve a decent return on my time and money.
YOUR CHALLENGE IS TO INCREASE INCOME WHEN RENTS ARE AT MARKET VALUE.
YOU CAN OFTEN SEE A 2-3X INCREASE IN RENT FROM HOSTING ON AIRBNB.
Kevin Hudoba Hudoba Real Estate Indianapolis, IN Connect with Kevin
Mike Butler Real Estate Investor Author of Landlord on AutoPilot Read Mike’s Book
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