Residents seek communities that meet their lifestyle and career needs. Cable and internet access are essential amenities in the multifamily industry today. Join JD and Melissa as they speak with Kevin Gardner to give you some ideas for increasing NOI at multifamily properties. This scheme is not only making residents happier; it also makes properties more valuable! Stay tuned!
Here’s what to expect on the podcast:
• What are value-add strategies popular for multifamily investing?
• How to leverage the partnership to grow your business?
• What are the pros and cons of bulk cable/internet service agreements?
• What are the property owners’ rights and utility easements?
• How can cable and the internet increase a property’s value?
• And much more!
00:00:00 – 00:01:45
Introduction to real estate wealth building
00:00:00 – 00:01:45
The hosts introduce the Real Estate Jam podcast, emphasizing the importance of understanding how someone can go from having almost nothing to becoming a millionaire through rental property ownership. They mention the surge in the peer-to-peer short-term rental market and stress the need to know the rules before entering the game. The podcast aims to share successes, failures, and strategies for action-taking real estate investors, welcoming both beginners and experts. JD and Melissa, the hosts, set the tone for an informative and engaging episode.
00:01:08 – 00:02:47
Guest Kevin Gardner intro and expertise
00:01:08 – 00:02:47
The segment introduces a discussion on strategies to save money and increase net operating income (NOI) to boost the value of multi-family properties. Kevin Gardner, president of Multi-Family Utility Solutions, is introduced as the guest speaker who will share valuable insights. Kevin begins to explain his background and how he arrived at his current position, starting with a personal story from his college years.
00:02:14 – 00:05:21
Kevin’s telecom and negotiation background
00:02:14 – 00:03:44
The speaker describes their early career choices between selling cable TV or replacement windows door-to-door, ultimately choosing cable TV because it seemed more appealing and offered free service. They began working for Comcast, a major telecommunications company, and as the company grew, they gained experience in various business areas, including negotiating with apartment owners to secure Comcast’s access to their properties.
00:03:44 – 00:05:21
After gaining insight from working inside Comcast, the speaker started their own company representing clients like Comcast and Charter Spectrum in negotiations with apartment owners. Their work helped these companies secure enough property contracts, prompting them to negotiate directly with property owners. The speaker finds this role rewarding because many property owners are unaware of the significant revenue potential they hold. Now, rather than representing telecommunications companies, the speaker helps property owners negotiate better deals, leveraging knowledge gained from their previous experience.
00:04:49 – 00:07:42
Utility solutions for property owners
00:04:49 – 00:07:42
The discussion explains the services provided to property owners, particularly relating to utilities. The speaker highlights partnerships with specialists in areas like trash removal and utility brokerage, noting that deregulated utilities such as electric and gas are limited to certain states. The main focus is on cable and internet rights for properties. It is clarified that while residents typically do not pay property owners for cable services, companies like Comcast require franchise agreements to operate in public easements and must negotiate separate permissions with property owners to access private multi-family properties. Property owners act as gatekeepers to these services, which holds significant value. The service helps owners recognize and leverage this value.
00:07:06 – 00:09:26
Value of cable/internet rights explained
00:07:06 – 00:09:26
The discussion focuses on the value of allowing multiple service providers in residential units without increasing costs or reducing options for residents. The speaker explains that this strategy is transparent and beneficial to residents. The feasibility depends on the number of units and varies by market and provider, with less than 20 units generally not worth pursuing. Around 50 to 100 units is typically ideal. The speaker also mentions offering free assessments and leveraging deals across multiple properties to create better opportunities, illustrating this with a marginal proposal received for a 74-unit property in Dallas.
00:08:55 – 00:10:42
Creating leverage with multiple owners
00:08:55 – 00:10:42
The speaker explains how they leveraged partnerships with multiple property owners to increase negotiating power with a cable company. Initially, one owner rejected an offer, but after representing a larger group totaling 1,600 units, they returned with a stronger proposition. This leverage resulted in the owner receiving more than double the original offer. The discussion clarifies that compensation to apartment complex owners from cable companies can come in forms such as door fees or signing bonuses for granting service rights.
00:10:07 – 00:13:38
Compensation models for property owners
00:10:07 – 00:11:37
The discussion explains two main compensation models for cable companies to access property services. The first is a lump sum payment made within 90 days of contract signing for exclusive rights. The second is a revenue share model with a sliding scale, where property owners earn a higher percentage as they help grow the cable company’s business. This model encourages preferred providers without eliminating consumer choice and payments are made quarterly based on generated revenue.
00:11:05 – 00:13:18
Another approach is offering cable or internet as an included amenity for residents by purchasing services in bulk at a reduced rate. This can make apartments more attractive and allow landlords to increase rent while residents save money compared to individual subscriptions. However, landlords bear the cost for all units monthly, regardless of occupancy or usage, which can pose financial risks, especially for properties with low occupancy or during renovations. The suitability of this model varies depending on property type, market, and landlord goals.
00:12:46 – 00:13:38
The speaker emphasizes that there is no one-size-fits-all solution for cable service agreements in properties. Each property and market is unique, with different goals influencing whether owners seek immediate income or long-term generational wealth. Decisions should be tailored accordingly.
00:13:12 – 00:17:05
Customizing strategies for property goals
00:13:12 – 00:14:17
The discussion begins with advice against buying a C-class property to upgrade to B-class, emphasizing the importance of clear goals when investing. The speaker explains that their company helps clients achieve these goals by acting as advocates for property owners rather than serving utility companies, ensuring aligned interests.
00:13:45 – 00:15:23
The company is compensated through commissions based on the amount they secure for the property owner, not by hourly fees or retainers. This commission-based model aligns their incentives with the client’s success. The speaker stresses that the company acts as a partner, working to maximize the client’s revenue from utility agreements.
00:14:52 – 00:16:36
Adding new revenue streams from services like trash, gas, electric, cable, and internet can increase a property’s value and net operating income. Many beginning investors are unaware of these opportunities. The speaker highlights that clients collectively increased their net operating income by four million dollars last year, which likely raised their asset values by around one hundred million dollars.
00:16:04 – 00:17:05
A personal anecdote underscores the importance of managing small financial details, as many small gains add up to substantial value. The speaker learned from a former CFO that focusing on incremental improvements is crucial because large sums are made up of many small units. The conversation transitions to discussing the process involved once an apartment complex is stabilized.
00:16:35 – 00:20:21
Process for assessing properties
00:16:35 – 00:17:57
The speaker explains the importance of involving their team early in the property acquisition and renovation process, even before closing a deal. They emphasize that early involvement helps analyze availability and potential cable services, acting as an advocate for the buyer. The team offers market insights and guidance to streamline the process, making it turnkey to accommodate the buyer’s busy schedule.
00:17:32 – 00:19:32
To begin the analysis, the team requires basic property information such as the name, address, and number of units. They handle administrative tasks like converting address lists into required formats and managing letters of authorization efficiently, saving the client time. The team also uncovers existing contracts that might affect the deal and advises clients to conduct due diligence accordingly. Their goal is to simplify the process so the client can focus on other priorities.
00:19:02 – 00:20:21
The discussion touches on the due diligence phase, noting that the complexity varies with the size of the property portfolio. The speaker hints at evaluating cost-effectiveness by comparing potential monthly expenses and long-term commitments, helping clients determine if the investment is worthwhile.
00:19:42 – 00:22:13
Typical financial benefits and revenue
00:19:42 – 00:22:13
The discussion covers the financial aspects of signing bonuses and ongoing revenue shares for property management deals. Signing bonuses are typically calculated on a per-door basis, ranging from $50 to a couple hundred dollars depending on property size and market competitiveness. For example, a 1,000-unit property could yield a signing bonus of around $200,000. Additionally, ongoing revenue is earned at an average of $2 per unit per month, which accumulates to about $24 to $25 per year per unit. While the ongoing revenue may be modest for smaller portfolios, it becomes significant with larger numbers of units.
00:21:33 – 00:25:58
Contact info and final thoughts
00:21:33 – 00:23:42
Kevin suggests starting research by visiting their website multifamilyutilitysolutions.com and connecting via LinkedIn, YouTube, or Facebook. He shares a success story of an investor who began with a small portfolio, learned about their services at a conference, and eventually expanded to over 800 units after consistent guidance and education over four years.
00:23:09 – 00:25:08
Kevin emphasizes the importance of acquiring knowledge even if it doesn’t seem immediately relevant, as it can add value in the future. He explains that understanding multi-family investment details can benefit both investors and service providers by increasing net operating income (NOI) and property value through small savings and efficiencies, which accumulate over time.
00:24:36 – 00:26:16
The discussion highlights that many investors are unaware of opportunities like avoiding unnecessary costs such as cable, which can create value. Kevin appreciates being part of clients’ success with a turnkey service that requires minimal effort from investors. The episode concludes with gratitude for Kevin’s participation and information on where to find more from The Real Estate Jam podcast.
00:25:39 – 00:25:58
The hosts invite listeners to send questions via email to the realestatejam gmail.com and express thanks for tuning into the episode, encouraging listeners to join again for the next show.
