Owning rental property, like an apartment building, can be an awesome investment. What’s better than monthly cash flow? But here’s the thing: it’s not enough to sit back and collect rent. If you want to build real, lasting wealth, you’ll need to play the long game. The real key to maximizing returns is increasing your property’s value.
In this article, I’ll offer step-by-step instructions on increasing the value of your rental property.
How to Calculate Rental Property Value
Real estate investors determine the value of an apartment complex differently than they would the value of a single-family unit. There are a few ways to calculate an apartment building’s value.
Option #1: Sales Comparison Approach
This method requires an investor to compare the subject commercial property to similar recently sold properties in the same area. Here, you’ll look at comparable properties and adjust for differences in size, location, and condition to estimate a fair sales price. For instance, if similar properties sold for $150,000 per unit, and the subject property has 20 units, its value would be $3 million. Note that if your building is located in a competitive market, this calculation approach is advised.
Option #2: Gross Rent Multiplier (GRM)
With this approach, you’ll calculate value based on the property’s total rental income. By multiplying the annual rent by a factor derived from comparable sales, you can quickly estimate the value, though it doesn’t account for operating costs. For example, a property with $200,000 in annual rent and a GRM of 10 would be valued at $2 million.
Option #3: The Income Capitalization Approach
For multi-unit complexes, the Income Capitalization Approach is the most common method.
This approach focuses on the property’s ability to generate income. If you ever deal with a commercial real estate broker, this is what they’ll likely care about. To calculate the value, divide the property’s Net Operating Income (NOI) by the Capitalization Rate (Cap Rate). The NOI is the annual income after operating expenses, and the Cap Rate reflects the expected return on investment. For example, if a property has an NOI of $500,000 and a Cap Rate of 8%, the property value would be $6.25 million.
Tips for Increasing Cash Flow and Equity
There’s almost nothing better than seeing those monthly rent checks come in. However, positive cash flow is just one part of the bigger picture. Monthly revenue can help cover expenses, make repairs, and pay staff. Heck – it might even pay your salary. But I challenge you to think of property value as your ultimate measure of success.
Increasing the value of your apartment building or multi-unit property means building wealth that will benefit you down the road. A valuable property gives you more financial flexibility. You can borrow against it, leverage it for future investments, or even use the equity to fund renovations on other properties.
With that in mind, there are a few ways property owners can add value and increase equity on your rental property.
For your convenience, we’ve ranked each of the following options according to cost
- $: Inexpensive
- $$: Moderate
- $$$: Costly
Tip #1: Improve Curb Appeal
First impressions matter. If the outside of your apartment complex doesn’t look appealing, potential tenants won’t check out the inside. Simple updates make all the difference to your rental properties.
Fresh Paint ($)
One of the easiest ways to spruce up your apartment complex is to repaint the exterior, doors, and trim. Stick with neutral or classic colors that have broad appeal. Even just refreshing the paint on doors and shutters can make your building look cleaner and more inviting.
Cost: Repainting the exterior of a multifamily property typically costs between $3,000 and $10,000, depending on the size and complexity of the building. Smaller touch-ups, such as painting doors and shutters, are much cheaper, averaging around $500 to $1,500.
Landscaping ($$)
Low-maintenance plants, such as shrubs or flowers, can bring color and depth to your apartment building(s). For maximum impact, keep the grass trimmed and the edges neat. You can even sprinkle some mulch in flower beds for that polished curb appeal prospective tenants crave.
If you’re short on time or budget, even the small touches, like adding potted plants near the entryway, can make the apartment complex feel more welcoming.
Cost: Planting new shrubs, flowers, and trees can cost around $500 to $2,500, depending on the number and type of plants. Hiring a landscaping service for ongoing maintenance can range from $100 to $500 per month.
Regular Maintenance ($)
A clean exterior signals that the property is cared for. Power-wash sidewalks and driveways, clear away debris, and fix any small damages like cracks in walkways or broken fencing. This attention to detail helps the property look its best and shows prospective tenants that you’re a hands-on, responsible landlord.
Cost: Power washing costs approximately $200 to $500, while repairs to walkways or fencing can range from $100 to $1,000, depending on the extent of the damage. In general, I’d put aside 1.5% of the monthly rent for general maintenance costs.
Update the Interior (Prices Vary)
Here’s the thing: No one likes an outdated kitchen. Everyone wants modern conveniences at a reasonable price range. Old kitchens or worn-out floors are huge turn-offs for potential tenants. But the good news is that modernizing interiors doesn’t always require a massive budget. A few strategic interior upgrades can add significant value, attract high-quality renters, and make apartment units feel up-to-date.
Here are some simple but impactful ways to upgrade your interiors:
- New Flooring ($$$): Flooring has a big impact on a space’s look and feel. Consider replacing old and outdated carpet with a more modern vinyl plank. Vinyl plank is affordable, durable, and easy to clean. It also offers that sleek, modern look that appeals to renters.
- Cost: Installing vinyl plank flooring typically costs between $3 and $7 per square foot, including materials and labor. For an average apartment of 800-1,000 square feet, this adds up to $2,400 to $7,000.
- Modern Appliances ($$): Appliances can make or break a kitchen’s appeal. If you’re dealing with an older set of appliances, upgrading to energy-efficient, stainless steel models is worth the investment. Tenants are often willing to pay more for a property with newer, reliable appliances that don’t require constant maintenance. You don’t need to purchase high-end models; just find appliances that fit the space well.
- Cost: A full set of stainless steel kitchen appliances (refrigerator, oven, microwave, and dishwasher) can range from $2,000 to $5,000, depending on the brand and size.
- Fresh Coat of Paint ($$): Paint is a quick and affordable way to transform the look of any room. Go for neutral colors like soft gray, beige, or light taupe, which tend to appeal to a wide range of people. Even just repainting kitchen cabinets in a crisp, modern color can give an old kitchen new life (without the need for a full renovation).
- Cost: Repainting interior walls typically costs $1 to $3 per square foot, depending on labor costs and the quality of paint. Repainting cabinets can cost $30 to $60 per linear foot. For a single apartment, expect to spend around $500 to $1,500 for a basic paint job.
- Updated Fixtures and Finishes ($): Replacing outdated fixtures like faucets, cabinet handles, and lighting fixtures is a small change that makes a big difference. For a modern look, go for sleek, contemporary designs in brushed nickel or matte black.
- Cost: Replacing fixtures can cost as little as $20 to $50 per piece for basic options or $100 to $300 per piece for higher-end models. Depending on the number and type of fixtures, the total cost for an entire apartment will usually fall between $300 and $1,000.
Ultimately, you’re looking for ways to justify higher rents, which can help increase the overall value of an apartment.
Tip #2: Add Desirable Amenities
You’re not just managing a piece of property; you’re managing a business. That’s why you need to ensure that the product you’re selling is a desirable one. Amenities are a great way to amp up the appeal of the product, aka your multifamily property, and improve occupancy rate. (These amenities may even reduce employee turnover).
Here are some desirable amenities you can offer that can help raise your property’s value.
- Fitness Center: A well-equipped gym saves tenants time and money. How easy it is to add one will depend on your building’s existing layout. If there’s an unused storage area, basement, or common room, it can often be converted into a gym without major reconstruction. However, if space doesn’t permit, converting multiple units may be required, which could significantly impact rental income and require more substantial renovations.
- Community Lounge or Co-Working Space: A shared space where residents can work, like a clubhouse or community building, can help foster a sense of community among your tenants.
- Outdoor Spaces: Adding amenities like BBQ areas, rooftop lounges, or green spaces may not require interior changes but will depend heavily on your building’s structure and outdoor footprint. For example, rooftop features may need structural reinforcement, while ground-level additions like patios or dog parks can often be installed with minimal disruption.
- On-Site Laundry Facilities: If your building doesn’t already have laundry rooms, adding them may require converting small storage areas or closets into usable space. These additions usually require plumbing and electrical work but can often be done without losing tenant units.
Tip #3: Add More Units
Adding more units is a no-brainer solution. The more liveable space you have, the higher your property value. The more units you have, the more money you’ll earn. It’s simple.
Three two-bedroom apartments will most likely always be worth more than two three-bedroom units. The more units you can offer, the better your total income.
While adding units may not always be possible due to zoning laws or building restrictions, it’s worth exploring if you have extra space. Even small changes, like turning a large studio into a one-bedroom, can increase rental income. In markets with high demand for rental properties, even a small increase in units can lead to a significant jump in property value.
Tip #4: Increase Security
An important aspect of tenant satisfaction is safety. People want to feel safe in their homes, and when tenants feel secure, they’re more likely to stay long-term.
Properties with enhanced security features often see higher rental income potential, which contributes directly to their overall property value. While none of these enhancements are cheap to execute, I believe they’ll yield a great return on investment.
- Upgrade Locks and Doors: Install high-quality deadbolts, reinforced doors, and sturdy frames. Deadbolts typically cost $100 to $200 per door, while reinforced doors and frames range from $300 to $700 each.
- Add Security Cameras: Visible cameras in common areas, entrances, and parking lots deter crime. Basic cameras cost $50 to $150, with advanced models featuring night vision or remote monitoring costing anywhere from $200 to $500. Installation costs average $100 to $300 per camera.
- Ensure Good Lighting: Brighten walkways, hallways, and parking areas with motion-sensor lights or well-placed fixtures. Light fixtures generally cost $50 to $300, with installation averaging $100 to $250 per light.
- Controlled Access Systems: Gated entries with keypad or card access are a highly sought-after amenity. Systems typically cost between $2,000 and $15,000, while installing a gate can range from $10,000 to $30,000, depending on size and materials.
- Communicate Security Policies. Let your tenants know you’re invested in their safety. Provide guidelines for safe practices, like reporting suspicious activity, and outline the measures you’ve taken to secure the property.
Tip #5: Focus on Maintenance
Investing in regular, preventive maintenance can save you a lot in the long run. Ignoring minor repairs often leads to bigger, more expensive issues.
Here’s the deal: Tenants notice when maintenance is delayed. And when they do, it can lead to dissatisfaction, which means higher turnover. If you keep things well-maintained, your property will retain its value, and tenants will feel more inclined to stay, keeping your vacancy rate low.
Tip #5: Add New Ancillary Income Channels (Or Optimize Existing Ones).
There are more ways to add value to your real estate investment – ancillary revenue.
Amenities like vending machines, laundry machine access, and premium parking spaces are tried-and-true ways to increase net operating income–without increasing square footage. You can also offer additional amenities at a fee, like charging stations, fitness center access, and valet trash.
This revenue generated from ancillary sources does more than pad your bottom line. It can also increase the property’s market value (therefore increasing the potential purchase price). JLL’s Kristin Mueller points out that “Ancillary income programs [have] become a year-round focus, and…an important part of merchandising a property” (ICSC.COM).
One solid ancillary income generator is Neighbor, a leading peer-to-peer storage marketplace. On this platform, you can rent your (unused) unpaved lots, parking spaces, garages, or storage spaces to non-residents and generate additional monthly income. The best part is you don’t have to worry about collecting payments every month. Neighbor manages (even guarantees) payment.
Neighbor’s team of pricing experts can also help you optimize your resident parking prices, assuming parking is an amenity you offer on-site. By raising parking prices by as little as $10.27 (per month, per resident), property owners can see a property valuation increase of $185k per year (*Note: Increases will vary by market – see chart below).
For more insights on what property owners in your market charge for resident parking, download Neighbor’s 2025 Multifamily Parking Report.
Got Extra Space?
Boosting your rental property’s value comes down to smart improvements and strategic upgrades. It will also depend on your ability to leverage the latest in multifamily technologies, like Neighbor.com, a parking and self-storage marketplace.
