Another Great Month of Real Estate - February 2025
I’m a little dizzy from how fast February flew by!
As always, each month brings new challenges and insights. Whether it's maximizing rental income, keeping financials in order, or evaluating new investment opportunities, there's never a dull moment. Looking forward to what March has in store!
Lease Renewals and Rent Increases
This month, we worked through lease renewals across several properties, ensuring we met our required 120-day rent increase notice. Our rent adjustments ranged from 3-5%, yet they still remain below market. While keeping rents low may seem tenant-friendly in the short term, it can negatively impact the building's long-term value. Rental income directly affects property valuation—when it comes time to sell, lower rents mean a lower appraisal, which can limit refinancing options or potential sales price. Striking the right balance between competitive pricing and maintaining market value is always a challenge, but one that must be carefully managed.
“It’s better to have a great tenant paying below market rent, than a stressful tenant paying any amount. ”
Tax Prep
With tax season in full swing, we wrapped up tax prep for all our companies. This process included collecting 1098 forms, reviewing profit and loss statements, and reconciling account balances. Having an organized system throughout the year makes tax time far less stressful. A well-maintained bookkeeping process ensures we can quickly identify any discrepancies and optimize our financial strategies for the coming year.
“If you keep your documents organized, you never have to spend time organizing your documents. ”
Missouri Cold Calling: Searching for Land
I spent some time cold-calling vacant landowners in Missouri, testing the waters for potential building opportunities. The initial response was promising, but after running the numbers, I’m skeptical about the feasibility of new construction. At $125 per square foot to build and an average sale price of $110 per square foot, the margins are simply too tight. While there may be creative financing or development strategies that could make it work, it’s looking like a tough sell under current market conditions.
“Things happen when you (1) pick up the phone and (2) get out of the house. ”
