Boosting Your Rate of Return in Commercial Real Estate
When you invest in commercial real estate, you want the property to become profitable sooner rather than later. While making good decisions before signing any contracts can help your property become profitable, there are some things you can do after signing to improve your rate of return. At Teviston Capital Group, our advisors are here to help you create the best return on investment (ROI) you can!
Decrease Vacancy
Every commercial building needs tenants, and as the building owner, it’s up to you to make the property attractive to potential businesses. Vacant suites or floors mean that there’s less revenue coming in each month, and that can severely impact your ROI. Promote your property by advertising locally, online, and anywhere else you can think of, showcasing the building’s location and amenities, along with its potential for a business owner.
Increase Rents
While you want to attract suitable business owners to your property with affordable rent, you also want to ensure that you’re charging an appropriate amount for each unit. If your current rates are too low, your rate of return could suffer. Look at similar properties in your area and see what they’re charging for rent each month. If you have current tenants, talk with them about a potential rent increase, pairing it with how it can potentially benefit them as well, in the form of building improvements and other updates.
Decrease Expenses
When it comes to commercial real estate, expenses can be found around every corner. You have a mortgage to pay on the building, utilities to cover for water, power, internet, and more, and there always seems to be something else waiting to be paid. As you look at your budget each month or each quarter, see where you can decrease expenses, such as finding a more affordable internet provider or hiring a different cleaning company. Small cuts can lead to big improvement on your rate of return.
Improve the Property
Newer buildings tend to attract more potential tenants, but even if you have an older property, you can update and improve it in order to be more competitive in the marketplace. Aesthetic changes such as new paint and new flooring can go a long way, but modernizing the property for communication, such as new fiber optic phone and internet lines, can make you stand out among the competition. An improved property can also allow you to charge a bit more for rent, since the building is updated and therefore more appealing to business owners.
There are many ways to boost your rate of return on a commercial property, and we hope that these four tips have given you some ideas on how you can improve your ROI. If you have any questions, please feel free to contact us at any time. We look forward to speaking with you!
