As the Canadian Real Estate market continues to increase in value, the multi-res market is seen as one of the most attractive markets by investors. With values doubling over a short period of time, if the thought of selling your property sounds appealing, we’d like to share a few ideas you could implement over the next year to better prepare for an eventual sale.
TIGHTEN UP THOSE FINANCIALS
With cap rates as low as they are currently, every dollar can make a significant impact on the value of your property. Landlords know to push rents to market on turnover wherever possible, but with rising rental rates across the country, tenants are not moving as much, resulting in less turnover and opportunities to increase the income are becoming less common. As the saying goes, every dollar counts. With lower turnover rates landlords need to proactively seek efficiencies. Here are some to consider:
- Take a proactive approach to find operational efficiencies in your property to reduce expenses where possible.
- If you are paying for water – this could be checking for running toilets or installing low flow faucets.
- It could include changing lights over to LEDs.
- Small improvements will lead to a better sale price for you. $1,000 in added NOI, is $25,000 in the property’s value at a 4% capitalization rate.
PUT ON SOME LIPSTICK
A first impression is important and here are some ideas to help you make that good first impression:
- Paint the hallways, do some landscaping, add some modern finishes to the common areas.
- A wise Realtor will have professional photos taken of your building prior to marketing – and to most Buyers – their first impression of your building will be on their computer or cell phone screen.
- Marked up walls, dirty floors, or ceilings with water stains are not a good first impression.
It’s a hot market and your building will sell without these improvements, but it will attract a different type of investor – and likely one who won’t be willing to pay top dollar for your property.
SHOW YOUR BUILDING SOME LOVE
As property values make significant increases over short periods of time you need to consider making small investments to maximise the available profits. This can easily be done by looking at upgrades with high ROIs:
- Let’s not be greedy – your building has doubled in value in only a few years, not decades… it’s been good to you. Show your building some love and upgrade some features that will need to be done in the next few years.
- Do you have an original boiler still but could break down in the middle of winter, or a roof that is in its final years? Buyers will factor these replacement costs into their valuation of your property – so why not remove these concerns and do the work for them.
The multi-res market has always been one of the most attractive in real estate and right now, it’s arguably the one attracting some major inventors. Whether you’re ready to sell your building now or in the future take a proactive approach before you put it up for sale. This will ensure you’ve taken advantage of every opportunity to increase the return on your investments.
Cover image is a recent 42 unit building sold in Kitchener, Ontario for $205,000 per suite.