With High interest rates, investing in your own properties can make more sense

[Alan Asriants]

The current market is making it extremely difficult to make any solid investments

What I am seeing with my clients is that unless you are putting 40% or more into an investment you aren't really cash flowing. I go into why this is happening in other posts, but for this one I will limit it to the fact that basically no deals make sense right now

Truth is... i am not sure when and if they will ever make sense

For those looking to buy more properties, try focus on another strategy:

Improving your current properties 

Instead of trying to buy deals that don't make too much sense right now, invest money into improvements and amenities.

Below I am going to list a few that I thing are great improvement that can increase your rental income and create more equity/appreciation. Putting money into your properties is not only a good idea, it will only add to the property, and the work can be a great write off. Win-win

Finishing the basement:

This is a great way to improve your rental property and create more income. Many properties in my area (Northeast Phila) have built as duplexes that have decent sized basements. These basements can be great to modify and turn into extra living space. Adding another bathroom in this living space will be even better. When renting it out you can charge much more and if you ever sell down the line, this will be a HUGE bonus that people will be willing to pay for.

Adding a bathroom or even a half bath:

Adding a bathroom or even a half bathroom is an excellent way to increase rent and create more equity. Many 2 bedroom apartments are nice, but if a tenant has the option between one that is 2 bed 1 bath or 2 bed 2 bath, they will take the 2 bath option almost every time, and they will pay more for it! Having only one bathroom is an inconvenience at times; the extra bathroom really makes a difference 

Building a deck or Patio:

This is an awesome upgrade. While it might not give you the best ROI, it is definitely a deal breaker if a tenant or buyer is choosing between a property that has one and one that doesn't. This feature is not only a great amenity, it will also add value to your rental income or sale price!

Recessed Lighting:

If your properties don't have this, you need to make this upgrade. It is relatively inexpensive but it does a great job of attracting great tenants. Everyone prefers overhead lighting than plugging a lamp into an outlet and stumbling over there to turn it on or off. This upgrade will elevate your property and give it a more modern feel. But please add lighting with taste!

Building Garages:

This is definitely not a cheap improvement, but it will sure add some value! My current duplex has a nice a spacious 2 bedroom apartment but there is just not enough storage. Having that extra garage would give your tenants or future buyer much more storage room or even a place to park their car. Trust me, a multi family property with a detached garage vs one that doesn't have one will have lots of value! 

If you think that these improvements are not good returns just consider this scenario:

You decide to finish a basement and create more living room and possible add a half bathroom. Around here it would cost roughly $28,000 ($40/sqft for 700sqft). This improvement would increase my rent by min $250/m

$250*12 months = $3000/year 

($3000/$28000)*100% = 10.7%

Not a bad CoC return. Not finding many deals that are giving me that return now. But also don't forget the addition value that you created making that upgrade...

There are more improvements that could be done and I would love to hear what others think!