Tricks to Raising Commercial Property Value: Part II
In “Tricks to Raising Commercial Property Value: Part I,” we focused on all of the cosmetic and structural changes you can make to raise your commercial property value. This part of the series will focus on how to reduce costs as another avenue of improving revenue. After all, having a lucrative commercial property means using real estate investment tips for every aspect of the venture — the property itself, the costs, and the opportunities for earned income.
Decrease Your Expenses
When you decrease expenses, basic real estate math says that you increase total revenue. Indeed, finding ways to decrease expenses without devaluing your property is a basic principle of commercial real estate ownership.
Reduce Expenses without Affecting Operation
Of course you could largely reduce expenses by providing only an hour of electricity a day, but this would of course negatively affect building operations. The trick is finding that Goldilocks balance between cutting expenses and maintaining tenant satisfaction. Here are some real estate investing tips to help you achieve this balance:
- Add energy-efficient light bulbs (a bonus is that green properties are becoming more valuable)
- Install effective heating and air conditioning systems; this might be an initial investment, but it’ll pay off in the long-run.
- Use economies of scale as much as you can; buy in bulk and use the same suppliers so you might get a regular purchase discount.
- Be diligent about routine maintenance to avoid bigger issues.
Modernize As Much As You Can
This real estate investment tip is connected to adding energy-efficient systems, but you really want to make sure that your property is as modern as possible. Newer systems might cost a bit up front, but they reduce expenses down the road exponentially.
Consider adding solar panels (which come with many tax benefits), energy-conserving windows, or an updated roof. Not only do these features look better and newer, but they can also incentivize tenants to commit to your property.
Get Your Property Valued
When is the last time you had your property valued? Your property valuation could have used extremely outdated or erroneous information. You can easily request that a tax assessor re-evaluate your property, and you can get a real estate lawyer involved if you think you have an unfair property valuation.
Smart real estate investing is all about weighing your cost versus opportunity. To make the most of your commercial real estate venture, be sure not to forget about the “expenses” portion of your ledger — it might involve expenses in the short-term, but it can certainly yield long-term gains.