Owning commercial property is a lucrative venture. If properly handled, passive income can be earned while receiving tax advantages from depreciation. However, there can be some difficulties if you want to fully maximize your portfolio, which is why many enlist the help of asset management firms. Think about using a commercial property management agency for your properties. Here are some additional tactics to help you increase your earnings.
Increase Rent
Remember that increasing returns on your commercial real estate investments depends on various factors. A slight increase will likely benefit your bottom line because it will encourage current renters to remain there and deter competition from relocating nearby. However, increasing rent too rapidly or too slowly runs the danger of losing money on an agreement or possibly facing a breach of contract lawsuit. You must refrain from letting your circumstances or emotions interfere with wise choices on how much to charge for space rentals if you want your commercial real estate business strategy to be successful. For instance, one of your homes is situated in a neighborhood where significant businesses and rivals are constructing several brand-new constructions. If prices are still below market value in that scenario, increasing them makes sense.
Improve Quality
Start by seeking tenants who will fit your property well. Look for tenants who will profit from the foot traffic and are prepared to pay higher rent if you own a retail location with a lot of foot traffic. This is one of the tried-and-true methods for succeeding in the market. Let’s say, for instance, that you run a grocery store in a city. In such cases, renting a cafe or deli instead of another grocery store would be worthwhile, given that those establishments will also draw additional tourists to the region (thus more revenue). Consider purchasing some real estate in another place if you own numerous commercial properties in one area to avoid being overly concentrated there.
When expanding your property portfolio, focus on larger properties rather than multiple smaller ones. Use the loan money to pay off all the existing, smaller properties. An investor can increase their return on investment by two or three times by using the equity from large assets as leverage against another piece of real estate than if they purchase two smaller pieces individually.
Look for new sources of income
While it may seem counterproductive to look for additional sources of income when you’re having trouble paying your bills, the truth is that there are several ways to raise your annual income without putting your safety in danger. For instance, you can look into various leases and set different rents based on the location and services the place being leased provides. Simple solutions for this include charging more per square foot in regions with higher rents or providing free parking with specific floor layouts or architectural features.