Rent increase calculator/formula needed

[Wolfgang5150]

Hello - I'm back after spending too much time on the car boards, and not enough on this one.
I'm going to start increasing rents on some of my properties - is there a formula I can use to show how much an increase in monthly rent will increase the value of the property over the long term? Or is it a simple calculation ($100 a month, is $1200 annually or $12,000 value over 10 years? etc)
SteveO/GLC, others. - looking for your expert advice.
Thanks in advance.
Kevin S.
Orchard Park, NY

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[EasyMoney_in_NC]

Wow.....thought you'd fallen off the earth!

Worth more to who? You or a potential buyer? Or in what way are you assessing value? It would certainly add to the cap rate calculation. Are you able to raise rents these days? I just had to drop one $45 a month to get it gone (took a deposit this eve.), one other I dropped $100 and it still sits (may list it for sale this week). I'm going to try the Buffet "I've made a lot of money selling "to cheap" ".

Now get off F-chat and get back to work!

 

[Wolfgang5150]

Hey E - been doing well. Real busy this summer; kids, cars, family, bbq'ing etc. Putting up a 1200 square foot building for my cars and to hang out in, on our property. I will start a thread on that when I'm done
My plan is twofold; one of my buildings can use an increase, so that will improve cashflow, but also if I plan to sell it, or re-fi. I'm in an agressive mode lately and want to maximize the value of my buildings, in order to grow. Whether I refinance or sell not sure.............I guess I need to use a cap rate formula.
I'll be on here more often.
Kevin S.
Orchard Park, NY

 

[M&T]

I have been increasing rent big time! I got a few emptied out .Painted and spruced up and asked $50.00 more per month and got it. I didn't feel they were low to begin with but I figured why not try and see what we get. I'm finding that rents are on the increase here in central Pa. As far as your question also I feel it adds to the cap rate . But... potential investors see that income and you can negotiate a higher price in some cases.It sure doesn't hurt!
M&T...

P.S. I ask people what they think an apartment is worth.I had a 1 bedroom basement apartment I wanted to rent for $525.00. The lady that was looking at it wanted to bring her dog. i acted like it would really kill the deal but asked how much extra she would consider for having a pet. She offered me $575.00. PER MONTH!!! $50.00 more per month just to keep her dog. I started doing this and added special clauses in the lease.Carpet and what have you.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Wolfgang5150]

Great feedback; thx.....Need to stay on top of rent increases more....
KS

 

[andviv]

You are talking about multi-family buildings, right?

Call a couple of brokers and ask them what are the cap rates in the area for a property like yours... use that to play with the numbers and estimate the "market value" of the properties. Improving the NOI will improve the price, but it will all depend on cap rates in the area.