Ways to increase rent (multifamily, rent control)

[Yannes Chiang]

Hi everyone. We just purchased a value add 6-unit in North Hollywood (CA). It is a rent control property. Currently the rents are way below the market rent and the existing tenants don't want to leave at all. We have done the following things to increase the cash flow - adding a laundry room, charging storage rent, installing energy-efficient lights and so on to cut the utility cost, renovating the unit in exchange of higher rent for the current resident.

What else could I do to increase the NOI? I am thinking about putting a covered parking space to charge parking rent? But I am not sure whether it is feasible to do so. I'd love to hear your thoughts. Thank you in advance!

[Lee Ripma]

@Yannes Chiang

Depending on market rent vs current rent it can be worth the investment. Our average buyout is actually about double what you listed. However, consider the math. If a tenant is $1,000 per month under market you'll get an extra $12k a year in income. At a 15 GRM the value of the buyout is $180k. With that in mind 10k or 20k don't seem that bad. So it's a great value add, especially if you sell or refi and capture it. It also ups cash flow significantly.