Flip and Danny explain forced appreciation: boosting property value by cutting expenses and raising income. Cut utilities with low-flow fixtures and LED lighting, charge for wifi and pet rent, raise rents strategically. They walk through concrete moves like preventative maintenance and bundled utility packages.
Hey, everybody. Flip and Danny here, founders of the Freedom Real Estate Group family of companies. And welcome to another episode of our.
Podcast, which is called Freedom through Passive Income.
That's right. And today's episode is called what is Forced Appreciation?
Yes.
Now, we sort of touched on this a little bit. We did on our previous episode, but I made a joke that forced depreciation is someone saying, you must appreciate that's not what forced depreciation is. I found out forced appreciation actually is the ability to increase a property's value by decreasing expenses and increasing the income.
That's right. So we talked about this a few times because a lot of the definitions and the terms and the things that we talk about actually interplay with each other. And since these videos are so short, we put bite size information in each episode and refer back to it as you guys can tell already. So we're just gonna, in this episode give you examples of how to decrease expenses and how to increase your income. So some of the examples that we have for decreasing expenses is having the tenants pay utilities. That happened at our apartment complex. The owner was paying the utilities. So when we redid it, we put together a utility package so the tenant was paying for their own. We also, we didn't do this, but we're gonna do this actually on our last unit that we're about to rehab, we're putting in low flow fixtures. This is actually something that I just learned about.
Say that again.
Low flow.
What are flicksters? I don't know what flixtures are.
And it's to bring down your water bills. So we're going to actually do it. We're getting ready to sell our eight unit. And so we're going to do it on the last unit that we're rehabbing so that the new owner is going to be able to see, hey, this is what this unit is costing. So if I want to do it for the other seven, is it worth it? And so, yeah, that's another way to decrease expenses. LED lighting.
Oh, that's huge. Because then light bulbs don't catch light, my lights burn out.
And yeah, the cost of the maintenance person going to go replace a light bulb because the tenant just didn't do it themselves. Wow. Energy efficient appliances, preventative maintenance. In our eight unit, we actually removed a boiler. That helped. And we installed PTAC units. So all of those things are just ideas on how you decrease expenses. And every property is going to be a little bit different. As you look over the financials and see what is going on, you'll have different ideas.
Yeah, there's so many variables.
Yeah.
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So then for increasing your income, examples of that are increasing the rent, adding utility package. So what we like to do is ball up all the utilities and then add $50. So there's a little bit of a premium that we're getting on every single unit for that utility package. It gives the tenants and consistency in terms of how they budget because it's flat, you know, every single time. Maybe in the winter we're not making any money, but in the summer we are making money. So it just kind of evens out. And that's how we've been doing on our properties. And this is actually a great idea that came to us from Alisa. So, Alyssa. Alyssa, if you watch this, we just both did that. I visualize your name when I say it. It's just crazy. And so I pronounce it wrong. I need to visualize it with an A. So I go, Alyssa. Okay. Anyways, adding wifi and charging for that, pet fees and pet rent, laundry facilities, parking, stor storage, amenity fees. There's many things that you can do depending on the complex and what's there. Obviously don't out price yourself. Like you don't want to have a $700 a month rent. And then after all of these fees, it's now 1,000 and people in that area can't afford $1,000 a month. You know, just be wise about exactly how you're increasing your income. Mostly just adding value to the residents that live there with you. So that's my ideas.
Yeah. And actually there's some great examples. Make sure you watch our, what we call our 56 unit horror story. There's parts one and part. This is more in the Chedda episode. And then there's also another podcast that we'd done a little while ago that was much longer in time. It was like almost 45 minutes. We really get into it. And so you can watch those and actually see real life stories of how we actually did it. So real life examples. So again, we like to keep these short and sweet. Hopefully if you're watching on YouTube, make sure you hit the subscribe button. If you're not watching on YouTube, hopefully you're watching on Facebook or LinkedIn because we're in groups on both those sites and that's facebook.comgroups freedom through passive income. And again, we're on LinkedIn. Same thing.
Yes, Freedom through passive income.
That's right. Catching the pattern here. But we're also on Instagram and TikTok, so make sure give us reviews. A five star review would be awesome, but let us know how we're doing. Let us know if you have any recommendations. Hey, can you guys talk about this or whatever? Hey, Flip, stop wearing that vest. You wear that vest all the time. Whatever it may be. But just let us know how we're doing. But we'd like to end up all of our episodes with Invest Smart, Live Happy. Bye, everybody. Nothing on this show should be considered specific personal or professional advice. Please consult an appropriate tax, legal, real estate, financial or business professional for individualized advice. Opinions and information on this show are not guaranteed. All investment strategies have the potential for profit or loss, y'.
All. Sam.
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