Current NOI has driven my market value down by $200k. Should I just cut my losses and sell?

I own a C class 16 unit (all bills paid) in TX which is in a low income area. I think I’ve maxed rents out at ~$600 and driven the expenses down as much as I can (utilities). I am out of ideas as if I raise rent or pass on utilities - it translates into vacancy. Current NOI has driven my market value down by $200k. What can I do to get value back up? Or should I just cut my losses and sell? Where is my area of opportunity to improve? Happy to share detailed financials if anyone is willing to help me with strategies.
Avg rent - $7000
Average expenses $3500
Average Occupancy is 75-80%
Thank you.

Certainly seems that the low hanging fruit is occupancy. What is the ave occupancy of the area?

Get vacancy down. That'll make more impact than anything else you are talking about

down?

yes, bring down vacancy. Vacancy is averaging 20-25% (he stated 75-80% occupancy) so there is lots of money being left on the table through vacancy loss. Definitely the quick fix to get heads in beds while you strategize on RUBS and add'l expense control measures.

oh I think we r on same page. You mean bring it up to 90’s meaning lower your vacancy. Read it to literal. Yes he needs to and quick

At smaller community, occupancy is the biggest factor to income. If you have one vacancy unit that's 16%. While it is difficult to maintain 100% occupancy in the real world, I'd look at other similar comps and find out what that avg occupancy and what do they do differently than you. Shopping the comp will probably give you other insights to rent, amenities and other things you never know is important.

Rahardjo Dree it’s 6% for one unit but I see your point. Thanks

Yuvaraj Vimawala that's what I meant lol thanks

Definitely fill them up even if you are going to sell. It is better to get a lower rent than to get nothing.

Hard to leverage scale on 16 units. And can only improve asset to the market potential. Have you addressed the big items? Labor, taxes, insurance, debt structure? Possibly creative ideas there. DM me if you wanna talk strategy.

Where in Texas? I’m in Fort Worth if you’re nearby I might be able to send you some prospects. I manage a senior community and they are always looking for all bills paid properties.

thanks. Waco, TX

What about minimum renovations or face lifts, a “SUPER RENOVATED SPECIAL” like $500 off or what works really well with some areas is flat screen TVs that you can actually order from Walmart for less than $300 - market the crap out of that special and use the minimal renovations as leverage to increase your rent rates. With your occupancy up, your income will flow

Hi Yuvaraj , I can help you with Ideas and or solutions I would need more information to be able to help you .
Please pm , I’m here to help

Your rent to expense ratio is good. Fill it up is your best option

Connie Mathes thank you. Yes that is first priority before more creative options

P.s. underwriters auto factor in a vacancy % in, regardless of past history. So if you decide to keep it, filling it up at lower rents aren't going to hurt your "value"

Can you add amenities that will increase revenue like coin laundry. Adds convenience of not having to go to laundry mat, but increases income.

Rachel Lynette Payton already there. Generates $250/quarter

Do you have any MTM leases? In Boston people are always looking for MTM leases but they’re few and far between. Maybe consider doing these as MTMs instead of 1 year, perhaps that’ll drive in prospects. Also, people love free stuff. If you advertise a “free” upgrade of your choice maybe that would work! Do something like a custom closet system ($200), TV mounting Installation, 2 weeks rent, accent wall painted, smart thermostat,etc. You definitely want to get the occupancy higher, or perhaps invest a little in some efficiency upgrades to help on utilities.

What size apartments are we talking even in an all bills paid location $600 seems low. I have been in the Fort worth market for 14 years.

Get your occupancy up and keep it there.

With 16 leases, you are looking at one or two turnovers per month if all spread out. You will have to engage residents and identify who is staying with an increase and pre sell units with lease ending no renewal. Think about why the regulars like your place (location convenience, low cost, atmosphere building style) and go find 4 four more who want same. Ask current residents if they have church or work friends who might be looking. Know your product value.

seek a local social services org that places tenants via subsidized programs and try to include utils at a premium. the org may even be the lessee further bolstering the guaranteed payments. this will raise noi and value, thus mkt value. then sell and run. i was part of a pilot program many moons ago and it got me out of a c class property. also one additional idea... recovery housing. such a lack available

Whats the reason for vacancy? Can you not fill those vacs?

LED exterior lights interior lights water saving shower heads faucets toilets

raise rent $20 month gimmick ads rent this month Brand NEW flat screen TV

Have u offered reserved parking spaces? Or even sell visitor spots, we just started charging visitors we charge 5 per car p night,, I have a small 116 unit property, we collected 400 the first mo

Occupancy will kill you on 16 units.

Affordable housing is in high demand in most markets, try to get that occupancy up! The rent price alone (with utilities paid) should keep it 100% ????. You can try things like water saving plumbing fixtures (shower heads, toilets flush valves), and LED light bulbs etc.

Have you tried bringing in someone who can assess your situation with a fresh pair of eyes?
When I go on to a property I quickly assess what's obvious and five deeper from there. I can turn most properties around in 90 days.
Some take a tad longer. I'd be happy to take a look for you and let you know how I can help.

Obviously, a vacancy issue as expenses looks in line to drive up NOI. Where in Texas are you located? Have you done a market study?