Ep. 253 Multifamily Monday: Finding Multiple Revenue Streams with Kevin Gardner Having spent nearly 20 years with Comcast, Kevin Gardner was responsible for managing the team that negotiated telecommunication access agreements between cable companies and multifamily property owners. In 2007, Kevin started Telecom Marketing Strategies to help multifamily property owners and third party vendors understand the cable operator perspective and maximize business opportunities. Having produced incremental revenue for multifamily property owners, they requested that Telecom Marketing Strategies help them with their other utilities, thus launching Multifamily Utility Solutions. Multifamily Utility Solutions services clients so they can not only save on cable, but also electric and gas utilities as well.
Some Topics Covered:
- What does Kevin really do?
- Scenario/example for Multifamily Property Owners
- Breaking down what a cable contract is
- The multiple ways these contracts can be structured
- The difference between Bulk and Non-Bulk contracts
- What happens to the cable contract if the property is sold?
- What Kevin’s company facilitates for multifamily property owners
- What beginners should lookout for.
00:00:01 – 00:00:34
Introduction to multifamily investment revenue opportunities
00:00:01 – 00:00:34
The podcast episode begins with a warm welcome from the hosts Jason and Pili, introducing the Real Estate Investing Foundation podcast. They express excitement about the show and announce their guest, Kevin Gardner, who will discuss a unique strategy for making money through multifamily investments that listeners might not have considered.
00:00:34 – 00:02:16
Kevin Gardner’s background and expertise
00:00:34 – 00:01:41
Kevin, with nearly 20 years at Comcast in various leadership roles, has extensive experience managing telecommute communications access agreements between cable companies and multifamily property owners. In 2007, he founded Telecom Market Marketing Strategies, the parent company of Multifamily Utility Solutions, which aims to help property owners and third-party vendors understand the cable operator perspective, maximize business opportunities, and increase revenue.
00:01:41 – 00:02:16
Kevin explains that his work primarily involves managing cable contracts for multifamily properties, helping property owners navigate these agreements. He and the host connected through mutual acquaintances who discussed innovative ways to maximize property value, highlighting often overlooked opportunities within multifamily property management.
00:02:16 – 00:03:24
Understanding cable contracts in multifamily properties
00:02:16 – 00:03:24
The speaker explains a common misconception that contracts are only needed for bulk cable situations. In reality, cable companies have the right to provide service within municipalities, but in multifamily properties, owners control private property that the cable provider must access. Therefore, property owners negotiate cable access rights separately. Many owners mistakenly believe that city cable franchises cover private multifamily properties, but they do not. This negotiation can potentially create additional revenue streams for property owners.
00:03:24 – 00:05:12
Case study: Louisville property cable contract situation
00:03:24 – 00:05:12
The speaker recounts meeting through mutual contacts and discusses a property in Louisville where no valid cable contract existed. They approached the cable provider to establish a contract but chose not to agree to the initial proposal to avoid disrupting residents. Later, with an additional property added, they revisited negotiations, now with a stronger offer due to combined customer access, emphasizing the cable company’s financial incentive to secure access to about 70 paying customers across both properties.
00:05:12 – 00:08:10
Negotiating access fees and revenue share options
00:05:12 – 00:06:26
The speaker discusses how property owners assess the value of granting access to their residences by calculating a return on investment (ROI) similar to multifamily investing. Different compensation structures are explored, including an upfront payment per door, which is appealing to owners who have recently purchased or are improving the property and might need immediate funds.
00:06:26 – 00:07:38
An example is given where property owners used upfront payments from a cable company to fund property improvements, such as upgrading a pool area, which helped justify rent increases. Alternatively, revenue sharing provides a monthly income based on tenant purchases, functioning like a commission with sliding scale percentages tied to benchmarks.
00:07:38 – 00:08:10
A hybrid compensation model can combine a smaller upfront payment with ongoing revenue share, depending on the owner’s long-term goals. Upfront payments suit those needing immediate cash, while revenue sharing benefits investors aiming to increase steady cash flow. The discussion then shifts to other contract decision scenarios, including bulk and non-exclusive agreements.
00:08:10 – 00:11:46
Bulk vs non-bulk cable contracts explained
00:08:10 – 00:08:48
Bulk contracts for cable and internet services have become popular because cable providers promote them as amenities for residents. In these agreements, property owners pay monthly for every unit, regardless of occupancy, making it a fixed expense.
00:08:48 – 00:09:26
Property owners can charge an amenity fee or include the cost in rent to offset the bulk contract expense. This approach can help raise rent to market rates or differentiate the property in competitive markets. The best choice depends on individual property factors.
00:09:26 – 00:10:03
Deciding between bulk and non-bulk contracts depends on factors like property size, market competition, investment strategy, and existing contracts. Each property’s situation is unique, so recommendations are tailored accordingly.
00:10:03 – 00:10:37
Non-bulk contracts allow residents to have direct relationships with cable companies, removing the property owner from billing issues. This option is preferred when units experience turnover or vacancies, providing flexibility and reducing risk for owners.
00:10:37 – 00:11:07
The speaker’s goal is to implement a non-bulk agreement with door fees and revenue sharing, which they consider the ideal model. This approach helps manage vacancy and turnover while generating income from cable services.
00:11:07 – 00:11:46
In bulk agreements, owners pay for all units, not just those with active service, at discounted rates. For example, if only some units want cable, owners still pay for every unit monthly, which is an important consideration when evaluating bulk contracts.
00:11:46 – 00:14:31
Importance of reviewing existing contracts during property purchase
00:11:46 – 00:12:53
The speaker emphasizes the importance of reviewing existing contracts, especially cable contracts, when buying a property. They explain that such contracts typically remain valid despite ownership changes and advise buyers to verify their existence during due diligence. An example is given where a buyer was misinformed about the absence of a cable contract, which was actually valid for two more years, highlighting the need to confirm contract details directly with service providers.
00:12:53 – 00:14:31
The discussion covers how the speaker’s company assists property owners and prospective buyers by quickly verifying the presence of contracts, often without requiring an initial contract with the client. They prefer to confirm contract details first before entering formal agreements to avoid unnecessary paperwork, especially if no service contract exists that could affect the transaction. The speaker values efficiency and minimizing redundant work in these processes.
00:14:31 – 00:16:57
Steps to explore cable contract revenue opportunities
00:14:31 – 00:15:40
When buying a property, it’s important to check for any existing agreements, especially revenue share contracts, to ensure payments transfer to the new owner. If an agreement exists, it should be audited carefully. Many agreements auto-renew and require advance notice—often three to six months—to renegotiate or terminate. Missing this window can result in unwanted extensions, as happened recently when a client missed the deadline by one day and was locked into a two-year auto-renewal.
00:15:40 – 00:16:57
Regarding billing options, starting with a door fee agreement can make it easier to switch to bulk billing later, as cable companies are more receptive to this transition. However, switching from bulk back to door fee is often more difficult. The speaker encourages erring on the side of door fee initially. They also mention that to learn more, people can visit their website, multifamilyutilitysolutions.com, for further information.
00:16:57 – 00:19:12
About Multifamily Utility Solutions and additional services
00:16:57 – 00:17:31
The speaker explains their branding strategy, currently using the full name ‘multiplied family utility solutions’ but considering shortening it to ‘M us.’ They offer assistance beyond their main business focus, specifically in states with deregulated electric and gas markets, where they have a broker to help clients reduce high utility bills.
00:17:31 – 00:18:08
The company operates on a commission-only basis, meaning they only get paid if the client benefits financially from the deal. This approach emphasizes trust and a win-win relationship, ensuring clients are not charged upfront for services that might not deliver results.
00:18:08 – 00:18:41
The speaker shares their personal business philosophy, valuing trust, respect, and mutual benefit. They avoid charging clients before proving their value and express enthusiasm about working on the client’s cable contract, indicating they have promising opportunities to explore.
00:18:41 – 00:19:12
Although the current location is not in a deregulated state and remains tied to traditional utility companies, the speaker is open to expanding services if they move to deregulated areas. They acknowledge that utilities are a significant expense for the property and appreciate the opportunity to share cost-saving information, hinting at an additional tip they usually do not handle.
00:19:12 – 00:20:46
Free tip: negotiating better trash removal rates
00:19:12 – 00:20:18
The speaker offers a practical tip for negotiating trash removal contracts by simply calling competitors to ask for better rates, highlighting how competitive the trash removal market has become. This advice is presented as an easy and time-efficient way to reduce costs. The conversation also touches on leveraging cable contracts as an additional revenue stream for property owners.
00:20:18 – 00:20:46
Jason thanks listeners for tuning into the Real Estate Investing Foundation podcast and encourages them to leave a five-star rating and review on iTunes to help grow the show’s audience. He signs off by inviting listeners to return for more tips and strategies related to real estate investing.
