Del Val Realty & Property Management (“Del Val”) took over the property management duties for a group of 47 rental units in Philadelphia and New Jersey in 4 separate buildings as of August 2015. At the time Del Val took over, the buildings were being managed by a single real estate agent with little or no support.
The buildings had extensive collection and deferred maintenance issues. When we took over, the buildings were 81% occupied and there was over $150,000 in unpaid rent. Additionally, it took months and even years to understand that the buildings had extensive deferred maintenance and almost every unit needed new paint, carpet/flooring, new/upgraded kitchen and other general upgrades. The common hallways also needed work to make them acceptable to tenants. Basements were full of years of trash left behind and needed extensive clean outs. The exteriors were also run down, and landscaping needed reworked.
Del Val took over and started to upgrade the vacant units with paint, carpet and other improvements. We also spent considerable time and effort to get all the buildings up to code from local township and state regulators. We cleaned up the exterior areas and did extensive clearing of trash from basements and storage areas. This allowed tenants to have access to their storage areas and dramatically reduced fire risks.
We then increased the rent $25 to $50 on any units we rented. We also gave the existing tenants a new 2-year lease with rent increases every 3 months to bring the rent up to market rates. We have also increased rent at each lease anniversary.
This process has been going on for over 3 years now and here are the results.
FY2016 FY2017 FY2018
Revenue $351,000 $385,000 $400,000
Net Income $114,000 $198,000 $270,000
Occupancy % 81% 98%
Average Rent $700 $780
As you can see by the above, the revenue has improved every year, but the real improvement has been the bottom line net income. The net income has more than doubled from $114,000 to $270,000. This has been a result of the occupancy percentage going from 81% to 98% and increasing the average rent by over $80 per unit during the last 3 years. We have also completed many of the deferred maintenance items and now maintenance costs have dropped by over 50% with that money dropping to the bottom line.
The improved net profit has more than doubled the value of buildings to the owners.
This article was originally published on the Del Val Property blog. Free Press Engine has republished the article in its entirety per Creative Commons Attribution-ShareAlike 4.0 International (CC BY-SA 4.0).