427: Creating Revenue Streams for Multifamily Properties

SHOW NOTES FOR EPISODE 427: CREATING REVENUE STREAMS FOR MULTIFAMILY PROPERTIES

Most multifamily operators don’t realize the multiple revenue-generating opportunities available to them.  In this podcast, the managing partner of Multifamily Utility Solutions Kevin J. Gardner shares insider secrets on how you can generate income from sources already located on your multifamily properties.

What You Will Learn

• Most apartment owners are not aware of all other income opportunities
• How to create multiple streams of multifamily revenue simply by signing a contract
• Subtle ways to increase your share of revenue from partner companies
• How you can generate additional revenue from services already located on your multifamily properties
• The two main ways to make money from Cable/Internet providers
• Why market research is key to getting the maximum returns on outside revenue

About Our Guest

Kevin J Gardner

After nearly 20 years with Comcast, including time as the Midwest Division Vice President of Sales and Marketing and as an Area Vice President, Kevin left the large cable operator side of the business to oversee Sales, Marketing and Customer Care at James Cable during a time James was trying to liquidate their properties.  James, being a much smaller MSO (Multiple System Operator) with systems throughout the southern and western United States, gave Kevin additional operational experience within the cable industry. Throughout his career, Kevin was responsible for managing the team that negotiated telecommunications access agreements for these MSOs.  For Multifamily Property Owners, Kevin’s experience has resulted in favorable contract terms related to their telecommunications agreements.  Additionally, TMS clients have realized significant savings from TMS’s department that specializes in negotiating energy and waste agreements on their behalf.

More About Kevin

• While he was at Comcast, he was promoted into the area where they dealt a lot with property owners of large apartment buildings
• He got a good understanding the needs of apartment owners and negotiating contracts and the process
• As Comcast grew larger, he longed for a smaller entrepreneurial business environment
• Was still involved in the cable industry doing consulting

Started his Own Company – Multifamily Utility Solutions

• Two of his first clients were Comcast and Charter Spectrum
  • They retained Kevin’s company to negotiate with apartment owners on their behalf to negotiate the agreements
  • Over time, they took that business in-house
• He thought, why don’t we go to owners and represent them
  • He found that many owners didn’t even know that there were revenue opportunities available to them until they approached the owners

How Multifamily Properties Can Benefit

• There are good opportunities for apartments with 50 plus units
• There are great opportunities for apartments with over 100 units
• The more units, the better deals you can negotiate
• There are two main ways to generate revenue for the apartment owner
  • As an amenity you offer all tenants
    • This is called “bulk-billed service”
      • That’s where, for example, an operator has a 100 unit building
      • He goes to a service and says he wants to provide cable TV and Internet for all 100 units as an amenity
      • The company provides the service at a “preferred price” because it’s being offered in bulk
      • The operator can get a “better than rate card” price
      • To get the good price, the operator much commit for a 5-year period minimum period AND has to pay for every unit, whether it is occupied or not and whether or not the tenant wants the service or uses the service
      • The operator can increase rent because of the “free” service
      • This requires more research on the property, market, and a recommendation
  • Right of Entry
    • The operator signs an agreement with the cable company giving them the right to be on his or her property
      • Many owners don’t realize that for a cable company to offer services to their tenants, they must have the permission of the owner
      • Tenants can’t just order service without having the apartment owner’s authorization
      • Owners generate income by getting:
        • A “door fee” or signing bonus – a on- time fee for all future business (usually exclusive marketing rights, usually must market the service)
        • Ongoing compensation/revenue share – Usually, a percentage paid quarterly, sharing the revenue they make on the property
        • By exclusively marketing you can increase your cut
          • By expanding your marketing avenues (i.e. website, point-of-sale brochures, newsletters, etc.), you can increase your cut
      • Property owner can restrict/prohibit satellite dishes and encourage people to get cable
        • For new leases you can
        • You have to be careful for tenant agreements set-up by previous management/owners
• Revenue received by the apartment owner depends on many factors:
  • Number of units
  • Is it a one, two or three provider area? (company competition factor)
  • Rural vs. big city
• 95% of their business is cable and Internet
• They do work with utility companies also but it is fairly limited
  • Only available in certain markets
  • Deregulated vs. regulated
  • Only works in about 20% of the country that has deregulated utilities

Biggest Mistake(s) Operators Encounter

• Not knowing that there are additional revenue sources like discussed that can benefit them
• Don’t know that operators must give permission to cable/Internet companies before they install on their site
• Not aware that they should have a contract for every cable/Internet company of their property

Big Success Story

• He had a client that had 74 units in Dallas, TX
  • Proposal was not that significant
  • Kevin went around the area to find other operators who want to pool with this client to increase unit count to 1,600 units
  • The benefit was much bigger for the 74-unit owner
• Client in Louisville, KY with 92 units
  • Couldn’t get a lot of leverage
  • But was looking at other area purchases
  • He waited and after the new acquisitions was able to get a much better return

 Current Business

• Attracting newer buyers
• Minimum number of units is going up
• Internet is surpassing cable in the market

Rap-It-Up

• Favorite real estate book: The Honey Bee by Jake & Gino
• Favorite business book: If it Ain’t Broke, Break It by Robert Kriegeland and Make Elephants Fly by Steven S. Hoffman
• Most valuable web site for success (other than your own): LinkedIn
• Favorite app: Facebook
• Favorite quote: “Only those who will risk going too far can possibly find out how far one can go.” T.S. Elliott  and “Things turn out best for the people who make the best out of the way things turn out.”  John Wooden
• If you had to start all over, knowing what you know, and you only had $1,000, what would you do to launch your real estate investing business? Network with others, go online, work LinkedIn to grow my business back.

How to Reach Kevin

• Website: MultifamilyUtilitySolutions.com
• Email: Kevin@MultifamilyUtilitySolutions.com

DISCLAIMER:  Many of the above strategies take knowledge and have a higher degree of risk.  You need to do your research and/or work with someone who is experienced to reduce your risk.

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Additional Episode Sponsor: Meno Studio – menostudio777@gmail.com