Home prices have soared, and the MLS is picked over for investor friendly deals. This has been an issue for investors for some time and doesn’t show signs of slowing with the current housing supply. It’s difficult to find a high ROI investment deal right now. The question is: “How can I still get an exceptional ROI these days?” I would recommend that investors look at their current portfolio and increasing rents as a savvy option.
Here is some of the rental data from last month’s issue:
50th Percentile Rental Prices in Green Bay:
Studio / Efficiency………………..$ 671
1-Bedroom …………………………$ 717
2-Bedroom …………………………$ 924
3-Bedroom ……………………….$ 1267
Provided by: Ruesch Management Leasing Division
Let’s apply this to an upcoming vacancy you may have, or a lease you don’t intend on renewing. Say you are getting $700 in rent currently on a 2 bedroom lower of a duplex. You believe that $900 is attainable with some cosmetic updates that will cost you $6,000. Doing those repairs would get you at 40% ROI… Here’s the math:
$200/m Rent x 12 months = $2,400 in additional revenue
$2,400 / $6,000 repairs = A 40% ROI
Investing in some cosmetic updates gave you this tremendous ROI and in addition, you have boosted the value of the property, and increased future tenant satisfaction. Plugging this $ into a mutual/index fund, won’t compare.
In summary, look at your current portfolio and maximize it. There may just be a lot
of hidden ROI right underneath your nose! Call up another investor buddy, talk to
your investing friendly agent, and determine where you can improve. This may be
a high $/hr activity for you!