Max Out Your Income Property
Getting passive income through your real estate investments is a great way to build your wealth. In this video I go into how you can not only get rental income, but how you can maximize your rental property income.
Actually knowing what your property could and should rent for can make or break a having a great investment property. Like if you’re Apple and selling Iphones lots of people will take it for $500, but apparently you’ll still sell out at $1200… so that’s a lot of extra money.
So as a broker of a company that manages over 1000 properties, a top 10 sales broker in Phoenix all of those deals being investment rentals and as a multifamily investor/syndicator myself I’ll show you some tips and tricks to maximize your property’s rental value. So you can maximize your wealth building potential through being aware of the fundamentals that are always a factor when investing.
First things first, you need to get the lay of the land. What’s your local market and who’s your competition.
Get some “comps”, you’ve likely heard of these: where you find at least 3 properties that are similar to yours. But I try to shoot for 5.
You can find them on Zillow, hotpads, apartments.com. But the best sites are really MLS and Costar which are things usually only real estate brokers have. Then you take the average of those rents and add or subtract your property value relative to their amenities, features, age, square footage, and everything else. And this is where most rental analysis stop, even if you get one from a licensed agent…but this video is about maximizing your rents, not just getting average rents… so next we do this!
Now we go find the nearest properties that have slightly higher rents or are obviously higher quality than your own.
We take that rental average and gauge whether or not it’s feasible to get your property to that level. Whether or not upgrading will make sense is based on 3 main factors:
- The property itself. Is its size, age, design good enough to improve?
- Are you in the right spot or are completely surrounded by your current rental average?
- And how much will the upgrade cost and relate that to the potentially new rental and even sales value.
That last part where you need a rehab bid that fits the specific upgrading needs it the most difficult part of this. If you’re in Phoenix or Tucson give us a call or fill out our management inquiry form because our designated broker is also a licensed contractor. Or try the same basic idea if you’re in another state. Just make sure they’re established and have lots of good reviews.
Okay so lets say you know the maximum rental value you could get and you know how much it’s going to cost.
What you do next is you take that cost for upgrades and subtract it from the appreciation you could conservatively get if you were to sell the property in x number of years. So if you pay $10,000 for a rehab but you get $10,000 in likely appreciation, then there’s no issue since you will essentially get more rents and a nicer property. You’ll also likely get a tax deduction from that upgrade… unless you’re in California where even if there is a tax deduction you still had to get like 50 permits over a 6-month period to install a doggy door.
But if the rehab is $20,000. Appreciation is $5,000 and rents increase and extra $100 a month. Then you will want to calculate your payback period. In this case it would take over 12 years to pay that off…so unless you’re keeping this property for a very long time, maybe just skip it.
And you need to remember that properties and upgrades do depreciate over time so there’s that. And if you have occupancy issues then maybe upgrades are needed just to fill up the place.
And if you’re wondering well Bob that’s great, but how do I know how my investment rental property would appreciate by doing all this, well then you can watch this video where I go into how to value your rental property. But just note that this stuff is relatively complicated given there are many factors playing at once. So you really will want to consider having an experienced mentor, business partner or hiring a pro who has a holistic understanding and practical experience with rental properties.
I know it may be annoying to be told you probably need a pro the first few times you do a deal, but just keep in mind you wouldn’t drive a car completely on your own the first few times either…because there’s simply too much at stake. That said knowing which way is up before engaging with anyone is always smart.
Associate Broker, CEO
I grew up in the Real Estate industry. I started by ripping up carpet for turnovers in middle school and have been moving up the ladder ever since.
Now I am ranked in Arizona’s top 10 brokers for real estate sales volume and total asset value sold. I am the go-to broker for large funds, Family Trusts, and select high net-worth individuals.
My newest Real Estate Equity Fund now brings my investors added value through our vertically integrated business model.
For years I’ve bought 30 houses a month cash at market rate. I buy and sell apartment complexes between Phoenix and Tucson. I reposition and rehab large apartment complexes in Arizona.
I helped grow the family property management company from 350 properties to over 1000. This was achieved by creating superior software and marrying that tech with generations of real estate experience.
Robert (Bob) Collopy – am not a CPA, attorney, insurance, or financial advisor and the information in these videos shall not be construed as tax, legal, insurance, construction, engineering, health and safety, electrical or financial advice.
IF stocks or companies are mentioned, Robert (Bob) Collopy MAY have an ownership interest in them — DO NOT make buying or selling decisions based on Robert (Bob) Collopy’s videos.
If you need ANY professional advice, please contact a qualified CPA, attorney, insurance agent, contractor/electrician/engineer/etc. financial advisor or the appropriate professional for the subject you would like help with.
Linked items may create a financial benefit for Robert (Bob) Collopy. Any use of other media is by fair-use only.
Fort Lowell Realty and Property Management Inc.
3020 E Camelback Rd #255, Phoenix, AZ 85016