Real estate investing is a lucrative business. Many of the world’s wealthiest individuals have bolstered their finances by investing in property, and this type of portfolio can provide additional income to those interested in diversifying their assets. Specifically, commercial properties give investors opportunities to increase their cash flow.
Breaking into the commercial building investment world is complex, especially if you do so outside of a collective or investment group. You take on the responsibility of managing that property, filling it with tenants, and maintaining the building so that costs stay low.
The question that most commercial real estate investors face is this; how can profits from this property be maximized? There are several methods that you can adopt to start earning more from your commercial property.
Hire a Property Management Firm
Managing a property takes a lot of work. Maybe you don’t have the time or the energy to do it yourself. To ensure that it is done correctly, you may want to consider working with a property management firm that can handle the day-to-day activities of maintaining the building for tenants.
How does this increase potential profits? This firm will be able to handle maintenance, tenant acquisition, setting rent prices that match the market, managing budgets, and other duties that can improve the cash flow of the property. The key is to hire the right property management company, and though you will have to pay fees, the additional income that can be generated will make it worth the cost.
Invest in Energy Efficiency
Utility costs can significantly hamper the earning potential of your property. At the end of the month, if the electric bill or other regular expenses are too hefty, you will see a lower profit ceiling. Making energy-efficient upgrades to the building can lower utility bills in the long term, making the initial cost worth it.
You can replace older windows with more efficient models that have better protection against extreme temperatures. Hiring commercial roofing professionals to replace old materials can result in less heat escaping the building and protect against water damage. Update lighting systems to be automated to save money on electricity.
There are endless opportunities for creating a more energy-efficient building that will lower monthly expenses and make room for higher profits.
Make Attractive Building Upgrades
Attracting tenants is the most important aspect of investing in commercial property. If no one is using the building and paying rent, then your income will suffer and you will lose money from loan payments and expenses. By investing in attractive upgrades that foster a great office atmosphere or other type of work space, you can turn the property into a hot commodity for businesses that need operating space. Open floor plans with large spaces, meeting rooms, and lots of natural light can be a big draw for companies that want their employees to be energized by their work environment. Research the types of businesses that could become tenants in your building and make upgrades to match their interests.
Provide Additional Services to Tenants and their Customers
Increasing your cash flow from a commercial property is not solely reliant on rent and expenses. You can also provide other services that you can charge for. You could retain control of the parking lot and accept parking fees from visitors, employees, or during nearby events. Providing advertising space for the business or other entities on the property can also generate more revenue. If you own a cleaning or garbage removal service, you can bring in additional revenue by having the tenants use that service exclusively.
One more popular method for earning more money from your commercial property is to sell it once its value has increased. Over time, the value will appreciate naturally, as it does for most properties that are well-maintained. But you can also increase the price manually by making upgrades such as energy-efficient changes or remodeled interiors. When you decide to sell the property down the road, the price will have risen significantly form the time that you initially invested in the building. This will result in an influx of cash from the sale that you can bring to your next investment or keep as a profit.
Make Your Investment Work for You
Adopting these changes can result in greater income from commercial properties. Whether you elect to work with a property management firm, invest in energy efficiency, make attractive building upgrades, provide additional services, or sell after value appreciation, you can fulfill your goal of earning more cash as a commercial real estate investor. Let your investment work for you by cutting down on expenses and making changes that increase potential income.