International Residential Real Estate Investors Association

More News on the Housing market

Real Estate Investor — Mon, 30 Aug 2010 00:44:24 +0000

The American home is shrinking. Toll the bell for the McMansion.

This new article from CNN Money is enlightening laying out recent Census Bureau data.

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After years of growth, the Census Bureau recently reported that median new home size fell to 2,135 square feet in 2009 after peaking at more than 2,300 earlier in the decade.

“Home buyers are asking for less, cutting back on options and reducing square footage,” said Steven Pace of the North Carolina-based Pace Development Group, which builds both custom and tract houses ranging in price from below $250,000 to more than $2 million.

“They’re saying, ‘Maybe we don’t need that 5,000 square footage;” he said. “‘Maybe our bath doesn’t need to be big enough for our whole family and all our neighbors to take a shower at the same time.’”

Kermit Baker, chief economist for the American Institute of Architects, pointed out that consumers don’t ask for as much for spaces devoted to single purposes, such as media rooms for watching videos and game rooms for shooting pool. Instead, the requests are for rooms with shared uses.

“We continue to move away from the ‘McMansion’ chapter of residential design,” he said.

QUIZ: Do you have an All-American house?

Now, the typical U.S. owner-occupied home has six rooms, with three of them being bedrooms, according to the Census Bureau’s annual American Housing Survey. The most common number of baths is two or more.

For those who remember the days of long, hot summers. Those are over, too. Nearly 90% of all new homes now have central air conditioning. And 63% of all homes are now cooled.

These are a big increases from even 10 years ago, when only 52% of owner-occupied homes — i.e. non-rental properties or second homes — boasted central air.

0:00 /2:25Newbie homebuyers go small

More than three-quarters of all homeowners now load up dishwashers, up from 65% a decade ago. And garbage disposals can be found in nearly half of owner-occupied homes, up from 46%.

On a broader scope, the survey revealed that, despite the recent hoopla about the new urbanism and return to cities, most Americans still lead a “Leave it to Beaver” lifestyle.

Of the more than 76 million owner-occupied homes in 2009, 63 million were traditional detached, single-family residences. And city dwellers, you’re outnumbered: Far more homeowners live in the suburbs than in cities.

Regionally, the South, held the largest number of owner-occupied units, followed by the Midwest, then the West and finally the Northeast.

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The Case Against Homeownership By Barbara Kiviat at Time Magazine

Real Estate Investor — Thu, 26 Aug 2010 12:45:39 +0000

The following article is telling and somewhat repetitive of the them I’ve been adding here so frequently the last few months. Interestingly, when I began writing about this in the spring, these stories were absent in the media. No one was talking about what was so obvious. Now, articles about the issues of home ownership are in the news daily. Much of the time, there are several articles on the topic. My question is when will the media and the caretakers of our economy realize that home construction is NOT going to be back, already plays a much diminished role in our economy and tinkering with this should be avoided, and that they need to get on to figuring out other ways to drive the economic ship of state?

In this article, perhaps the most interesting point to me that they make is the discussion about how home subsidies hollowed our cities. I hadn’t really considered the idea from that perspective. The fact is denser living is more economically efficient. With the crisis behind us, this is a trend that is likely to remain with us for the long term. As we come to grips with our debt issues personally and as a state, subsidies are likely to weaken and fall away strengthened by a demographic and therefore voter base is less dependent or driven by them. This will further accelerate this already developing trend. Investors must pay special attention to this factor when considering potential buy and hold, new construction, and market opportunities.

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Now the Time article:

Homeownership has let us down. For generations, Americans believed that owning a home was an axiomatic good. Our political leaders hammered home the point. Franklin Roosevelt held that a country of homeowners was “unconquerable.” Homeownership could even, in the words of George H.W. Bush’s Secretary of Housing and Urban Development (HUD), Jack Kemp, “save babies, save children, save families and save America.” A house with a front lawn and a picket fence wasn’t just a nice place to live or a risk-free investment; it was a way to transform a nation. No wonder leaders of all political stripes wanted to spend more than $100 billion a year on subsidies and tax breaks to encourage people to buy.

But the dark side of homeownership is now all too apparent: foreclosures and walkaways, neighborhoods plagued by abandoned properties and plummeting home values, a nation in which families have $6 trillion less in housing wealth than they did just three years ago. Indeed, easy lending stimulated by the cult of homeownership may have triggered the financial crisis and led directly to its biggest bailout, that of Fannie Mae and Freddie Mac. Housing remains a drag on the economy. Existing-home sales in July dropped 27% from the prior month, exacerbating fears of a double-dip. And all that is just the obvious tale of a housing bubble and what happened when it popped. The real story is deeper and darker still. (See pictures of Boise’s struggling housing market.)

For the better part of a century, politics, industry and culture aligned to create a fetish of the idea of buying a house. Homeownership has done plenty of good over the decades; it has provided stability to tens of millions of families and anchored a labor-intensive sector of the economy. Yet by idealizing the act of buying a home, we have ignored the downsides. In the bubble years, lending standards slipped dramatically, allowing many Americans to put far too much of their income into paying for their housing. And we ignored longer-term phenomena too. Homeownership contributed to the hollowing out of cities and kept renters out of the best neighborhoods. It fed America’s overuse of energy and oil. It made it more difficult for those who had lost a job to find another. Perhaps worst of all, it helped us become casually self-deceiving: by telling ourselves that homeownership was a pathway to wealth and stable communities and better test scores, we avoided dealing with these formidable issues head-on.

Now, as the U.S. recovers from the biggest housing bust since the Great Depression, it is time to rethink how realistic our expectations of homeownership are — and how much money we want to spend chasing them. As members of both government and industry grapple with re-envisioning Fannie Mae, Freddie Mac and the rest of the housing finance system, many argue that homeownership should not be a goal pursued at all costs.

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Housing Sales Plunge in July – What Does It Mean?

Real Estate Investor — Wed, 25 Aug 2010 13:22:20 +0000

Check Out this CNN Financial Article. The author sees new lows for housing, but no fall into a 2nd recession. I think housing may take a harder fall than this author projects, but agree with the logic as far as it goes.

Plunging home sales could sink recovery

By Hibah Yousuf, staff reporterAugust 24, 2010: 4:03 PM ET

NEW YORK (CNNMoney.com) — With home sales plunging to their lowest level in 15 years, economists warn that a double-dip in housing prices is just around the corner, threatening to further slow the overall recovery.

Existing home sales sank 27.2% in July, twice as much as analysts expected, to a seasonally adjusted annual rate of 3.83 million units. Much of that drop is attributed to the end of the $8,000 homebuyer tax credit.

That credit brought buyers out in droves, as they tried to sign home contracts before the April 30 deadline. Now, two months later, sales are 34% below April’s tax incentive-induced peak.

“Home sales were eye-wateringly weak in July,” said economist Paul Dales of Capital Economics. “It is becoming abundantly clear that the housing market is undermining the already faltering wider economic recovery. With an increasingly inevitable double-dip in housing prices yet to come, things could get a lot worse.”

The sales pace of all homes — single-family homes, townhomes, condominiums and co-ops — is at the lowest since NAR began tracking the figure in 1999. Sales of single-family homes, which account for a bulk of the transactions, are at the lowest level since May 1995.

Inventory has also continued to climb, rising 2.5% to 3.98 million existing homes for sale. That represents a 12.5-month supply at the current sales pace, the highest since October 1982 when it stood at 13.8 months. A six-month of supply is considered normal.

5 most affordable cities to buy a house

The combination of weak demand and glut of homes has put downward pressure on prices.

And as the recession proved, the housing market and the broader economy are closely intertwined. When housing prices collapse, so does the overall wealth and confidence of Americans.

“Falling housing prices strain the overall confidence in the economy and discourage Americans from spending,” Dales said. “They also mean that banks lose money on their investments and curtail lending, meaning there is less money out there to invest and boost the economy.

The NAR report showed that the median price of homes sold in July was $182,600, up 0.7% from a year ago. Just under a third of homes sold during the month were distressed properties.

0:00 /2:30Chinese house flipping forms bubble

Though prices have yet to fall back, Dales expects they will decline about 5% from current levels over the next six months.

On the bright side, Dales said while a drop prices will put a dent in the economy recovery, it won’t lead to another recession.

“The bulk of the downward adjustment in housing prices has been achieved over the last several years, so we’re not headed for a complete disaster,” said Dales. “We’re going to see a double-dip in housing prices, but not a double-dip in the overall economy.”

Sales by property and region: Sales of single-family homes sank 27.1% in July compared to the prior month, while condominium and co-op sales tanked 28.1%.

The Midwest fared the worst last month, with sales dropping 35% to an annual pace of 800,000 units in July. that’s 33.3% lower than a year earlier.

Resales in the Northwest dropped 29.5% from the previous month to an annual pace of 620,000 units.

They fell by 25% in the West and 22.6% in the South.

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The New York Times Weighs In On Homeownership

Real Estate Investor — Wed, 25 Aug 2010 00:16:34 +0000

By David Streitfeld

Housing will eventually recover from its great swoon. But many real estate experts now believe that home ownership will never again yield rewards like those enjoyed in the second half of the 20th century, when houses not only provided shelter but also a plump nest egg.

The wealth generated by housing in those decades, particularly on the coasts, did more than assure the owners a comfortable retirement. It powered the economy, paying for the education of children and grandchildren, keeping the cruise ships and golf courses full and the restaurants humming.

More than likely, that era is gone for good.

“There is no iron law that real estate must appreciate,” said Stan Humphries, chief economist for the real estate site Zillow. “All those theories advanced during the boom about why housing is special — that more people are choosing to spend more on housing, that more people are moving to the coasts, that we were running out of usable land — didn’t hold up.”

Instead, Mr. Humphries and other economists say, housing values will only keep up with inflation. A home will return the money an owner puts in each month, but will not multiply the investment.

Dean Baker, co-director of the Center for Economic and Policy Research, estimates that it will take 20 years to recoup the $6 trillion of housing wealth that has been lost since 2005. After adjusting for inflation, values will never catch up.

“People shouldn’t look at a home as a way to make money because it won’t,” Mr. Baker said.

If the long term is grim, the short term is grimmer. Housing experts are bracing themselves for Tuesday, when the sales figures for July will be released. The data is expected to show a drop of as much as 20 percent from last year.

The supply of homes sitting on the market might rise to as much as 12 months, about twice the level of a healthy market. That would push down prices as all those sellers compete to secure a buyer, adding to a slide that has already chopped off as much as 30 percent in home values.

Set against this dismal present and a bleak future, buying a home is a willful act of optimism. That explains why Adam and Allison Lyons are waiting to close on a $417,500 house in Deerfield, Ill.

“We’re trying not to think too far ahead,” said Ms. Lyons, 35, an information technology manager.

The couple’s first venture into real estate came in 2003 when they bought a condo in a 17-unit building under construction in Chicago. By the time they moved in two years later, it was already worth $50,000 more than they had paid. “We were thinking, great!” said Mr. Lyons, 34.

Grand expectations
That quick appreciation started them on the same track as their parents, who watched the value of their houses ascend for decades. The real estate crash interrupted that pleasant dream. The couple cannot sell their condo. Unwillingly, they are becoming landlords.

“I don’t think we’re ever going to see the prosperity our parents did, but I don’t think it’s all doom and gloom either,” said Mr. Lyons, a manager at I.B.M. “At some point, you just have to say what the heck and go for it.”

Other buyers have grand and even grander expectations.

In an annual survey conducted by the economists Robert J. Shiller and Karl E. Case, hundreds of new owners in four communities — Alameda County near San Francisco, Boston, Orange County south of Los Angeles, and Milwaukee — once again said they believed prices would rise about 10 percent a year for the next decade.

With minor swings in sentiment, the latest results reflect what new buyers always seem to feel. At the boom’s peak in 2005, they said prices would go up. When the market was sliding in 2008, they still said prices would go up.

“People think it’s a law of nature,” said Mr. Shiller, who teaches at Yale.

For the first half of the 20th century, he said, expectations followed the opposite path. Houses were seen the way cars are now: as a consumer durable that the buyer eventually used up.

‘People shouldn’t hold their breath’

The notion of housing as an investment first began to blossom after World War II, when the nesting urges of returning soldiers created a construction boom. Demand was stoked as their bumper crop of children grew up and bought places of their own. The inflation of the 1970s, which increased the value of hard assets, and liberal tax policies both helped make housing a good bet. So did the long decline in mortgage rates from the early 1980s.

Despite all these tailwinds, prices rose modestly for much of the period. Real home prices increased 1.1 percent a year after inflation, according to Mr. Shiller’s research.

By the late 1990s, however, the rate was 4 percent a year. Happy homeowners were taking about $100 billion a year out of their houses, which paid for a lot of good times.

“The experience we had from the late 1970s to the late 1990s was an aberration,” said Barry Ritholtz of the equity research firm Fusion IQ. “People shouldn’t be holding their breath waiting for it to happen again.”

Not everyone views the notion of real appreciation in real estate as a lost cause.

Bob Walters, chief economist of the online mortgage firm Quicken, acknowledges that the recent collapse will create a “mind scar” just as the Great Depression did. But he argues that housing remains unique.

“You have to live somewhere,” he said. “In three or four years, people will resume a normal course, and home values will continue to increase.”

Overbuilding
All homes are different, and some neighborhoods and regions will rebound more quickly. On the other hand, areas where there was intense overbuilding, like Arizona, will be extremely slow to show any sign of renewal.

“It’s entirely likely that markets like Arizona will not recover even in the 15- to 20-year time frame,” said Mr. Humphries of Zillow. “The demand doesn’t exist.”

Owners in those foreclosure-plagued areas consider themselves lucky if they are still solvent. But that does not prevent the occasional regret that a life-changing sum of money was so briefly within their grasp.

Robert Austin, a Phoenix lawyer, paid $200,000 for his home in 2000. Five years later, his neighbors listed a similar home for $500,000.

Freedom beckoned. “I thought, when my daughter gets out of school, I can sell the house and buy a boat and sail around the world,” said Mr. Austin, 56.

His home is now worth about what he paid for it. As for that cruise, “it may be a while,” Mr. Austin said. Showing the hopefulness that is apparently innate to homeowners, he added: “But I won’t rule it out forever.”

This story, “ Housing Fades as a Means to Build Wealth, Analysts Say,” originally appeared in The New York Times.

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The Numbers Say No to a Double Dip Recession

Real Estate Investor — Mon, 23 Aug 2010 16:39:28 +0000

Investors are unsure of future trends. American consumers pulled $33 billion out mutual funds last month because of uncertainty. The opportunity and risks are hard to understand. However, the spread between short term and long term bonds suggest a very low probability of a new recession — less than 20%.

The spread between the short term and long term bond is normally a reliable barometer. Add further that with rates so low large corporations are reducing their debt costs. At the same time, corporate America is sitting on over 1.6 trillion dollars and banking is in a similar position with $1.3 trillion in their coffers. Last, but perhaps biggest of all corporate profits have surged over 36% in the past year. This is the largest move on record.

In normal circumstances statistics like this would support rapid expansion. However, the American consumer is still increasing savings with the rate up to 6.6% annually recently. And, consumers continue to rapidly improve their balance sheet with 21 straight months of continually falling credit card debt. These statistics are putting downward pressure on consumer spending and keeping the economy in shackles.

Nevertheless with two years of growing profits and falling corporate debt, steadily increasing consumer debt, and steadily falling consumer debt load, the likelihood of a sharp fall is not great. In fact, the numerical weight of these factors provide growth even if it is muted a very strong foundation.

At the present time, investors should be taking advantage of the low rates to capture high quality investment properties and lock themselves in for a long term strong improvement in the U.S. economy. Caution about the type and market locations is prudent given many other factors like increased rentership, likely long term slow home construction, and trends against smaller markets and markets without strong information business bases.

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New Homes Sales Graph Tells Many Tales

Real Estate Investor — Sun, 22 Aug 2010 11:56:22 +0000

The graph of new homes sales from 1963 to present tells an interesting tale. The point that stands out in my mind is that the graph climbed ever upward for approximately 13 year period. Coincidentally, the Baby Boomers were were born from 1945 to 1964 in the United States and this 13 year period would describe the generations ever growing need for new homes.

While the echo boom is much the same size (about 75 million), the issue is not the size but the increase. The U.S. housing market’s needs for housing as demonstrated prior to this period held in a pretty stable range that fits well with the projected U.S. population growth projections for the coming generation. Based on this pre-baby boom surge, a post recession new household requirement of 700,000 to 800,000 homes per year could be a safe bet (this allows for the much larger base level of the U.S. but accepts the prior cycles as more representative).

For investors, this expectation requires significant consideration. If one accepts this premise and if one accepts the premise that many of these homes will come from the already existing stock as many mcmansions become homes for multiple family. New construction could end up at significantly less than the 700,000 to 800,000 because of this potentially very large substitution effect.

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This CNN Money Article Offers “New Normals” in America

Real Estate Investor — Sat, 21 Aug 2010 18:58:12 +0000

Five ‘new normals’ that really will stick

CNN Money – August 21, 2010

This article from Fortune offers hints that may help you find better investments and may lead to a new world of investors for principals. I hope you enjoy this article as much as I.

By Nin-Hai Tseng, reporterAugust 20, 2010: 1:13 PM ET

FORTUNE — Whenever we go through a major change in our culture, it seems we have to adjust to ‘the new normal.’ And today is no exception — as the U.S. economy struggles to recover from the financial crisis, Americans are being forced to reckon with more ‘new normals’ than we’d like.

Of course, we adapted to ‘new normals’ long before the phrase became cliché. According to a Factiva search, one of the earliest references came in a Newsday article in 1988, in which ‘the new normal’ referred to the realities of single parent households and the need for more government-funded childcare. After September 11, 2001, the ‘new normal’ referred to the vulnerability of a nation changed.

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Today it’s everywhere. A search for the phrase on the New York Times web site yielded 11 results in just the past five days.

It’s not easy to change Americans’ financial habits permanently, and ‘new normals’ don’t always last. Fortune found five that just might stick, at least for a while.

Long-term unemployment

With the jobless rate standing stubbornly close to 10%, it’s tough not to wonder if high unemployment could be a long-term fixture of the American economy. With little to no hiring in the private sector, it almost seems like the only new jobs out there are — well, devoting the day to finding a job. The Obama administration has been speaking out against joblessness as the ‘new normal,’ saying the problem is cyclical.

Economists predict that unemployment will drop to 8.7% by end of next year, and by 2013, it will fall to 6.8%. Even if the predictions pan out, that’s no easy target. A University of Maryland business professor this month told The New York Times that the economy would have to add 300,000 more workers a month over the next three years to get the jobless rate to fall to the administration’s 2013 target. Earlier this year, when the economy made a brief comeback by growing at a healthy 3%, it added fewer than 100,000 jobs a month. When the jobless rate will return to pre-recession levels of about 4.6% (as it was January 2007) remains to be seen.

Renting over owning

Buying a home may never be the promising investment it was before the crisis hit. Gone are the days of looking at a lovely Cape Cod and seeing an instant piggy bank.

Between 2006 and 2009, home prices fell more than 32%, according to the S&P/Case-Shiller Home Price Index. And just when it looks like the gravely weak housing market is beginning to stabilize, we hear more bad news. In its latest monthly report released July 27, Case-Shiller warned that a broader look at home prices over the past year haven’t shown sustained recovery, even though the index surprisingly bumped 5% compared with May 2009.

Meanwhile, it appears keeping up with the Jones’ no longer means having a mortgage. The idea of renting is okay, and in many cases, preferred. Between 2004 and 2009, the number of renter households rose nearly 10% or by 3.4 million, according to a 2010 study of the Joint Center for Housing Studies of Harvard University. The rise of the renting class might be here to stay.

Saving over spending

If paying down debt and saving more is the ‘new normal,’ this might not be such a bad thing, at least in the long-term. Americans overspent for too long, and that’s largely what got us into this financial mess.

In June, credit card balances fell by $4.5 billion, or 6%, according to the Federal Reserve, marking the 21st consecutive month of declining balances. Meanwhile, personal savings have risen to 6.4% of after-tax incomes, about three times higher than it was in 2007.

Of course, all this saving isn’t exactly helping our economy in the near term. But if we’re more responsible spenders after we emerge from this economic malaise, we’ll save ourselves some more pain in the future.

Staycations over vacations

With high unemployment and a preference for saving more as possible mainstays of the U.S. economy, more of us are also likely to vacation closer to home. Though some consumers are expected to travel more this summer than last year, when the staycation officially became a trend, many are driving instead of flying and they’re also spending less on whatever trips they do take. But more are opting to stay home entirely. In a USA Today/Gallup Poll released in May, 27% say they plan to travel less this summer than last, compared with 18% who say they’ll travel more. More than one-third do not see much change in their travel plans.

Higher taxes for ‘the rich’

Depending on whether or not President Obama has his way, the nation’s top earners (what some might call ‘richest’) could see higher taxes as the ‘new normal.’ In an effort to reverse the huge tax breaks enacted under the George W. Bush administration, Obama’s plan would mean people making more than $195,550 in taxable income and joint filers with taxable income of more than $237,300 would be pushed up into higher tax brackets, from the current 33% and 35% brackets to 36% and 36.9% brackets next year.

While some argue this could further hamper an already weak economy, others say this new normal could also help reduce the country’s huge budget deficit. Perhaps this new normal isn’t so much about higher costs for the so-called rich but rather an equalization of the nation’s tax structure.

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We Are Planning to Merge with / Become an Investment Club

Real Estate Investor — Tue, 17 Aug 2010 21:07:04 +0000

We’ve provided a lot of information, but feel we aren’t serving you as well as we can. Because of this over the coming months we intend to merge with an investment club. This plan is based on accomplishing the following:

Providing you a monthly forum to interact live with our team about investment issues.
Offering you an investor network centered on one of the most vibrant investment markets in the nation in Washington, DC.
Providing access to club discounts and promotion.
Offering the opportunity to participate in club events for members.
Dramatically expanding the network of investors you can work with.
Allowing our members to participate even if they can’t personally attend club meetings if they are in the DC area.
Provide a club that allows you to join from anywhere in the world at any time of the day.
Provide vastly expanded videos and other tools and services.
Deliver an even more robust resource than you’ve had before.

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Housing Market Trends – New Report

Real Estate Investor — Tue, 17 Aug 2010 12:19:44 +0000

2010 continues to be full of interesting news for those of us in the rental business and especially multifamily. Here are facts to get your attention:

50% of new household formed over the next decade will be multifamily. Please note that this is multifamily and not rental alone.
By the end of the decade home ownership will be less than 62% down from 69% in 2005.
77% of Gen Y / Echo boomers prefer urban living.
Rental demand is anticipated to move up sharply in 2010.
The U.S. is on a path to 438 million by 2050 from 310 million today.
Housing density has moved downward since 1940, but recently has ticked upward. This trend in the future is not clear, but the square footage per resident is expected to continue to trend downward as the urban trend gains momentum.
Demand is expected to far outstrip supply in major market urban centers.
The big winners are expected to be the largest metro areas including NYC; Washington, DC; Atlanta; Miami; Houston, San Francisco; etc.

The sources for this information are University of Utah, the Urban Land Institute, the Department of Commerce, and the Census Bureau.

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More Cash… Cash In On Your Property

Real Estate Investor — Tue, 10 Aug 2010 17:08:21 +0000

The following article is a great bookend to Urbane’s new shuttle service and it just may put a little cash in your coffers to boot!

AOAA Offers this great blog on potential revenue opportunities for our properties.”

8 Ways to Make More Money

by Gary Zaremba

You need more money. The rent roll doesn’t cut it and the banks won’t return your phone calls. Before the ulcers set in, there might be some ways to squeeze more juice from the lemon.

Billboards: Let’s start at the top. If your building is near a major thoroughfare, you roof is a source of valuable income for very low maintenance. By placing a sign atop your structure, you can generate a monthly rental without doing a thing. A sign company changes the advertising which you can market yourself or sub out to an agency.

Down at street level you might be able to place more signage that advertises local businesses. These signs are much smaller in nature and usually would be placed for longer periods of time.

With both these ideas, you must consult local zoning codes to make sure you can place these signs.

Storage Lockers: Take a good look around your basement and the lightbulb might go off in your head signaling dollar signs. By turning dead rooms into paid storage space you can again invent money from nothing. For instance, placing private storage lockers in newly painted, well lit rooms will let your tenants keep more things without renting at outside facilities. Not only will this generate immediate income, it will also add another amenity to your building.

Laundry Rooms: Everyone in your building at some time will be down in the laundry room. This audience is captive and bored with time to kill. You can exploit this by setting up a locked display board and charging local merchants for putting in their ads. Tenants with items to sell or meetings to announce can also use this vehicle to reach their neighbors.

Roof Decks: Outside space! That’s all your hear from landlocked New Yorkers. If you can turn your roof into a patio area, a whole new area of revenue will open up. You can either subdivide the space and rent it out individually or make it a common area and adjust the rents accordingly. Here again, you’ve not only created more income, but you’ve added an amenity which will make your building more attractive to potential tenants.

Air Rights: Look up. It’s a bird, it’s a plane, it’s money raining down into your lap. The space above your building might not mean anything to you, but to a developer, it may mean big bucks. Here, it’s a good idea to consult your attorney to find out exactly what air rights you do have and what is the best way to sell or lease them.

Back Office Space: Sometimes all a business needs is space for a desk and a phone. A small storage closet or some dead space in a larger room could be converted into a commercial area for a small businessperson. As with some other ideas, this will have some upstart charges, but they will quickly recouped through you new rental income.

Yard Space: The back alleys or rear yards are sitting idle just waiting for the right idea to spring them to life. Many businesses need storage areas for machinery and equipment they don’t use everyday. If you have access which will not interfere with your other tenants and the hours that these areas are in use are limited, then you might have a workable solution.

Lobbies: Since essentially everyone who enters your building comes through the lobby, a display board similar to the one in your laundry room will generate income without costing you anything. It can be bright and cheerful and blend into your existing decor.

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