Return From an Alternate View

Sure a 13% year-one return in a good, growing, location would be awesome. However, these days, that's not a readily available product. For a few years now, investors have been challenged to think a little more about positioning their investments. One strategy, I encourage is to look at a property's rental rate position.

Is the rental rate above the market? If so, it might be hard to demand equal or more rent in the near future. Is the rental rate below market? If so, you might have a good opportunity to raise rent in the near future for a lease renewal or new lease.

Okay guys and girls, this is not a trick question. Generally speaking, if expenses stay constant, for this example, and rents increase, what happens to the bottomline? Net income goes up, therefore, return increases as well.

The idea is not to merely look at rents, however, that is generally a reasonably easy factor. I want to encourage you (and myself), to find alternate views to uncover value in properties. Find your niche. Is it rental rates? Traffic counts? Population density? Starbucks with in a certian distance? You would probably be surprised how some high-level executives approve properties.