Kevin Gardner, Managing Partner, Multifamily Utility Family Solutions reveals how syndicators can partner with utility providers to increase the ROI on their investments. Will a utility provider partner with you if you own a small property? What sort of savings and bottom line addition can you expect on inking such a partnership? You will also the nuances of structuring a contract with your utility provider so that you can draw maximum benefit on partnering with a utility provider. Tune in for some great money making tips!
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00:00:01 – 00:01:39
Introduction to guest and show purpose
00:00:01 – 00:01:39
The episode of the Real Estate Syndication Show, hosted by Whitney Sewell, introduces guest Kevin Gardner. Whitney explains that the show is designed for investors and real estate business builders to master syndication. Kevin Gardner shares his background, highlighting nearly 20 years at Comcast with roles including Midwest division vice president of sales and marketing, and area vice president. He later managed sales, marketing, and customer care at James Cable during a property liquidation phase. Kevin’s expertise in negotiating favorable telecommunications contracts makes him a valuable resource for those in the value-add real estate business looking to enhance profitability.
00:01:08 – 00:03:57
Kevin Gardner on utility management
00:01:08 – 00:03:57
The speaker explains their role in managing utility agreements, primarily cable TV contracts, for property owners across all 50 states. With prior experience negotiating on behalf of cable companies, they now leverage insider knowledge to secure the best deals for property owners. They advise property owners or prospective buyers to contact them early, even before ownership, to assess existing agreements and potential added value. The speaker highlights the importance of negotiating prorated shares of existing contracts when properties change hands, emphasizing that new owners are often entitled to a portion of the remaining contract value if they ask.
00:03:22 – 00:05:35
Focus on multifamily properties and cable agreements
00:03:22 – 00:05:35
The discussion focuses on cable companies operating exclusively in multifamily residential properties due to franchise agreements tied to municipalities. These companies need a right of entry agreement with property owners to access private property and serve tenants. Many mistakenly believe the franchise alone grants access or that agreements are unnecessary if residents pay for cable. The right of entry has significant value, influenced by factors such as the number of customers, property size, and market competition. Assistance is provided to property owners to negotiate and understand the potential value of these agreements.
00:05:03 – 00:07:07
Property size requirements for utility deals
00:05:03 – 00:07:07
The discussion focuses on the minimum property size required for cable operators to consider a deal. Properties with fewer than 40 units are generally not viable, with 100 units being the ideal size. While combining smaller properties into a larger portfolio is possible, anything under 40 units is usually not an option. A portfolio with multiple properties adding up to 150 units, for example, could present a good opportunity. The speaker also mentions that typical savings from working with their service are not easily quantifiable.
00:06:24 – 00:07:54
Typical savings and competitive markets
00:06:24 – 00:07:54
The speaker discusses recent deals where nearly 300 units were secured in one market with a company, earning $100 per door under one agreement. Another deal yielded $150 per door for 80 units, highlighting the value difference between a non-competitive and a highly competitive market. The cable company valued the smaller number of units more due to competition from other companies. The speaker then prompts consideration of additional utilities that could be assisted or leveraged.
00:07:11 – 00:09:30
Negotiating other utilities beyond cable
00:07:11 – 00:08:52
The discussion focuses on negotiating utility contracts beyond cable, specifically electric and gas pricing, which can be managed by an in-house broker. Negotiations depend on the owner’s usage, particularly if there are multiple laundry rooms, pools, or extensive common areas consuming significant electricity or gas. Savings from these negotiations can be passed on to the owner. However, electric and gas contracts can only be negotiated in deregulated states—13 for electric and 10 for gas. The best opportunities are in the six states where both utilities are deregulated.
00:08:18 – 00:09:30
The states where both electric and gas are deregulated, offering the best negotiation opportunities, include Ohio, Illinois, Pennsylvania, Massachusetts, Connecticut, and New York. These states are primarily in the Midwest, Mid-Atlantic, and New England regions. Cable contracts, by contrast, can be negotiated in any state.
00:08:54 – 00:15:49
Common negotiation mistakes and owner goals
00:08:54 – 00:11:04
The discussion begins by highlighting common mistakes made when negotiating cable contracts, especially by those who haven’t hired an expert. Different types of concessions can be granted to cable companies, such as exclusive marketing or wiring rights, each carrying distinct value. The approach to negotiation depends on the property owner’s goals. For example, if an owner plans to hold and improve a property, upfront door money payments are preferred, which can then be reinvested into property enhancements. Alternatively, revenue sharing is an option for those wanting ongoing cash flow. The speaker emphasizes tailoring negotiations to align with the owner’s business objectives.
00:10:35 – 00:12:45
The conversation transitions to the importance of understanding owners’ goals before making recommendations on contract structures, including hybrid models combining upfront payments and revenue sharing. A brief promotional segment introduces a virtual workshop by a real estate CPA to help syndicators manage investor tax questions and K-1 distributions efficiently, enhancing investor relations. The speaker then discusses their commission-based business model, emphasizing working with trusted partners and sharing risk, as they only get paid if the property owner profits, fostering a collaborative partnership.
00:12:42 – 00:14:45
The speaker describes their commitment to educating new investors and fostering long-term relationships. An example is given of a young investor who started with 12 units, was advised to target properties with 40 or more units to leverage better deals, and then returned a year later having secured 60 units and ready to engage professionally. Another case involved a property owner with 94 units who did not profit immediately from negotiations but valued the relationship, which later led to additional purchases totaling 48 units. This illustrates the speaker’s focus on win-win partnerships and long-term growth.
00:14:44 – 00:15:49
The final segment stresses that many people are unaware of what to ask for in utility and cable contract negotiations, often assuming terms are fixed or already settled. The speaker reassures that their experience and aligned goals aim to maximize the property owner’s profits. They emphasize honesty and a commitment to making as much money as possible for clients by uncovering overlooked opportunities in these agreements.
00:15:16 – 00:18:26
Due diligence tips for utility agreements
00:15:16 – 00:16:51
The speaker discusses the importance of requesting utility lease agreements during due diligence when acquiring a property. If no agreement is found, it’s advised to consult an expert as some agreements may still exist despite not being initially disclosed. Long-term agreements from years ago, such as 15 to 20-year leases, often become lost through multiple ownership changes, but they can still impact the property.
00:16:19 – 00:18:26
Due diligence is essential to uncover any existing agreements that might affect the property. If an agreement is discovered, the expert can inform the client, and once it expires, the client may return for further assistance. When reviewing agreements, special attention should be paid to dates and terms, especially auto-renewal clauses. Missing notification deadlines for auto-renewal can result in unintended extensions without additional compensation. Many old contracts include auto-renewals with specific notice periods, and failure to act on these can cause financial loss. It’s important to understand the rights granted in these agreements to avoid missing out on potential benefits.
00:17:57 – 00:19:29
Granting rights and exclusive agreements
00:17:57 – 00:19:29
The speaker explains a deal made in Michigan involving two competing companies who both paid to operate on a non-exclusive basis. This arrangement benefited the residents by providing choice, allowed both competitors to avoid exclusivity, and resulted in significant revenue for the property owners. The lack of an exclusive agreement enabled this flexible and profitable setup. The speaker then invites questions to clarify important aspects of their business model for the audience.
00:19:01 – 00:20:33
Additional utilities and cost-saving tips
00:19:01 – 00:20:33
The speaker advises viewers on how to save money by negotiating better deals on utility contracts such as electric, gas, propane, and trash removal services. They suggest calling current providers to mention shopping around, which often prompts providers to offer lower rates unless a contract is in place. This approach can be done independently without paying fees to intermediaries.
00:20:02 – 00:22:22
Networking and business success advice
00:20:02 – 00:20:58
The speaker emphasizes the importance of networking and partnerships in business. They share how promoting others’ work, such as podcasts, helps generate leads and fosters mutual growth. The mindset is that businesses are not competitors but partners, with enough opportunities for everyone.
00:20:58 – 00:22:22
The speaker highlights their experience collaborating with others through podcasts, speaking engagements, and sponsorships, stressing that everyone has value to offer. They advise focusing on the next right step and networking consistently, believing the business will naturally flourish. They also share that their success stems from enjoying their work, treating business as a hobby rather than a chore, which makes the process rewarding and fulfilling.
00:21:44 – 00:24:08
Contact info and concluding remarks
00:21:44 – 00:23:34
Kevin from Multifamily Utility Solutions shares how listeners can add value and increase their bottom line through services they may not have considered. He invites anyone interested to reach out via the company’s website or his email for questions or additional information, emphasizing collaboration within the industry. The host encourages listeners, especially those with or working towards owning 100 or more units, to connect with Kevin and learn how to improve their business outcomes.
00:23:07 – 00:24:08
The host wraps up the episode by promoting LifeBridge Capital, encouraging listeners to schedule calls via their website and join their Facebook group for expert insights. LifeBridge Capital supports investors nationwide and donates 50% of its profits to help parents committing to adoption. The episode ends with an invitation to access free materials and videos online to aid in real estate investment success.
