As a holder of real estate investment, you always want to maximize the capital value of your asset.
For one, it’ll give you more leverage in future financial arrangements around real estate. Maximizing the capital value of your real estate further increases your potential capital gains should you finally sell the property.
Depending on the size of your real estate investments, you can manage them yourself or get a property/asset manager. Either way, your goal should always be to maximize the value of your property. Here’s how to do that, assuming you opt for the former option.
Protecting property rights
Your property has some inherent rights that influence its value. And it’s your duty as a manager – or owner – to protect those rights so the property’s value is enhanced. Or at least ensure nothing diminishes the value of your investment property. The neighborhood characteristics of a property affect its value. As do news of proposed developments in an area.
It’s not unusual to see many property owners up in arms against local authorities because of these plans. The savvy property owners know how these developments can impact the value of their real estate assets.
Similarly, encroachments and adverse uses can diminish the capital value of a property. And as an investor or property owner, you must enforce your property’s rights against that. That will help preserve the value of your asset.
In many of these examples, you must be proactive to prevent some things from happening. Waiting to repair the harm could be too late, as some damage (to reputation) could take too long to correct.
Adapting the property to changing needs
Times are changing fast. And no industry/sub-sector is left untouched, including real estate. As an investment property owner who wants to maximize the value of your investment, you must stay abreast of changes in your industry that can affect your property’s value.
A classic example is the changing needs of users. While shiny office buildings downtown were the crowning jewels for many property investors, that’s no longer so.
Hybrid working and falling demands for office spaces threaten many such investments in that class globally. If you own that type of asset, you may have to get creative with alternative uses for the empty office units. That will help preserve some of the investment’s value.
For example, should you focus on attracting retail businesses instead? Can you convert parts to other recreational uses like an e-sports complex, a creative workspace, or maker spaces for tech movements?
It’s not unusual to find many empty buildings converted to residential apartments – not without significant costs, though.
Embracing technology and sustainability
Another way to maximize the capital value of your real estate investment is to embrace modern technology and finishes. That will help bring your property to the levels of contemporary real estate offerings. That way, you can stay on top of the times rather than leaving your property behind in the old days.
These days, with a focus on sustainability and resource efficiency in buildings, you have another option to maximize the capital value of your asset. Determine ways to upgrade your building to meet some of these sustainability ratings. It will also be a classic future-proofing method for your asset.
Yes, these may come as costs in the short term, but those costs are investments that will maximize the value of your asset.
Restructuring other property rights to get the most value
Another crucial property right is leasing part of the property to other users. In exchange for that, you collect rent and fees. To maximize the value of your real estate asset, you should always find ways of (re)structuring these rights to ensure they bring added value.
For example, do shorter or longer leases help your property better? You could go the way of longer leases to enjoy security of income; you could opt for shorter lease arrangements to enjoy market rent and other rent escalation benefits.
You may even consider licenses and permits that bring extra cash and visibility to your property. That will further enhance its reputation in users’ eyes and overall value.
Depreciation is an ever-present in real estate assets. And it can eat into the value of your investment if you don’t deal with it.
The least you could do is ensure you’re constantly looking out for what needs maintenance – fixing it.
Even though you can’t fight natural depreciation, you can control how much it shaves off the value of your real estate investment asset. If you aim to maximize the capital value of your real estate investment, your work is straightforward.
You can do it yourself or find a property/asset manager to handle that.
Always look to maximize the capital value of your real estate investment
Real estate investments have an excellent value appreciation potential. While the market will play a part, you must pull your weight as an investor to realize that aim.
How well you play your role will determine how well your real estate asset appreciates. The good thing is you’re in control.