Some people tend to think that making money through the rent in the real estate can only occur with residential property. This makes many property owners not to think at the first instance that commercial real estate can also bring rent profit as it also has tenants.
When we talk about a commercial property we are referring to apartment buildings, office buildings, warehouses, retail buildings, industrial buildings and “mixed” buildings. These properties have a potential of earning profits, but good returns are not realized immediately. It usually takes a lot of understanding and hard work to attain success in property investment.
Therefore, let us now discuss how an investor can boost rental income made from a commercial real estate.
1. Create more space in the property
Optimizing the commercial property space that is used is usually the common and initial way to boost positive cash flow received. For instance, if you have recently bought an unfinished commercial real estate, you might consider dividing some incomplete parts into several spaces or offices that are reasonable. Consider that tenant do not want spaces that are too small or too big or uncomfortable but those that are well designed.
If the demand of the a1ready available space is more, the economical option might be to have additional square footage. Another way of boosting the rental income gained is by adding more parking, storage, event spaces or employee gathering space depending on the kind of property investment.
2. Embrace Commercial real estate property maintenance
Commercial real estate investors would like to reduce the maintenance cost with the aim that it will boost rental income. While such an approach can be useful to the property owners in some cases, it is bound to backfire. This is because commercial properties usually involve a lot of wear and tear compared to residential properties. Therefore, instead of encountering expensive repairs and emergency replacement costs unexpectedly, you should take a step to do regular maintenance.
Have a standby repair company that can dea1 with electrical or plumbing problem whenever damage occurs to deter loss of tenants. Thus, Property owners who care for their commercial properties ought to arrange appointments for repairs and routine checks.
Building maintenance also entails making interior or exterior changes to the property. Improve the appearance and increase the investment properties value through upgrading poorly designed, unfashionable or outdated commercial real estate doors or windows. You can also choose to refresh the property’s appearance without making any primary structural adjustments by simply painting outside bricks.
Increasing security level and maintaining it is another crucial way a property owner can use. The owner can make it more attractive by adding gates, shutters, and alarms. In this way, they will be able to protect against unexpected cost as well as enable the rental income to be high in the long term.
3. Give additional services to the tenants
Additional services usually boost rental income as well as improving the competitiveness of your investment in the commercial property market. For instance, whenever tenants sign a lease agreement, property cleaning services, maintenance or trash removal can be provided at an extra cost.
In places near entryways or common areas who are there are plenty of tenants, investors can put snacks, drinks or coffee machines. Although vending machines do not add to the rental income, it can be good when a tenant wants to grab a late night snack or quick morning coffee cup.
Storage and parking space are another good additional services that can boost your rental income. You can either choose to rent your property and provide free parking which will come with a spot fee or select a property without parking space and offer an extra fee for parking. Investors can also install billboards and offer to advertise the businesses they are renting.
4. Strategically increase the rent
The cash flow maximization approach that comes into the mind of an investor is to increase the monthly rent. However, this is not an appropriate method to apply whenever more cash is needed even if it seems such an easy solution. Usually when the price is justified then tenants easily accept to pay higher for rent. 0therwise, tenants may opt to leave the property for another similar one.
When is the right time to increase rent? Property owners can have a reason to charge higher rent when the local market and the whole economy seems to be doing well. Tenants will hardly object paying extra every month when both the economy and themselves are also doing well. Another reason for increasing rent is after making renovations and improvements which tenants can appreciate their value. Therefore, when it comes to increasing rent, it should be done gradually to give some time for tenants to adjust.
5. Reducing properties tenant turnover and vacancy rates
Vacancy and turnover should be avoided since it is costly in many ways. 1f you are able to find long-term tenants and retain them, you will be able to deal with turnover and minimize vacancies.
Charging right kind of rent, customer service, as well as an excellent location, are some of the things you can do to prevent competitors who have also their commercial properties from fishing your tenants. Property owners should maintain a good relationship with their tenants through enhancing professionalism, respecting their concern and respond effectively to appropriate needs.
You should aim to minimize turnaround time in case our tenant moves out of your commercial property. This can be done by regularly posting ads to attract new tenants thus increasing the cash flows and maintaining higher rentals.
The bottom line
Real estate is usually considered as one with the best investment since it provides numerous opportunities to generate cash flows and grow wealth. When an investor chooses to invest in a commercial real estate so as to gain rent, the above approaches can boost the rental income received after implementation. However, before implementing the above approaches, investors should thoroughly analyze each of the above methods and identify which one is suitable for their kind of commercial real estate property.