I have taken a bit of a pause here at MBG due in large part to Mills Properties budget season. Every year around this time we dive head first into a process that takes the better part of two plus months to complete. We do our best to space it out so that any one VP, RM or AM does not get creamed. And, in the same respect it does take a good deal of focused time to do a budget right. With that in mind, I want to get back to posting to the blog as it provides good therapy for the day-to-day hustle of property management.
Today’s topic is telephone income.
Telephone Income Defined
Telephone Income is derived from a couple of different sources. Roughly twenty years ago plus or minus, it came from the likes of AT&T and or other local providers. Our on site sales teams would offer to transfer existing phone service or they would initiate the call for new service to be set up. For that, the property received a commission. It didn’t amount too much but it was income.
Around the same time, at least according to my aging memory, revenue share models arrived on the scene. Similar to cable and internet shares, in exchange for exclusive marketing rights, the providers gave the property owners a piece of the revenue. The share amount was equal to your ability to negotiate. These amounts started to mean something in the way of overall property value. Not huge but something nevertheless.
Cell phone towers changed all that. Providers would come in, especially in the case of high-rise buildings, and pay huge lump sums with ongoing payments. They would erect cell phone towers on your building and or land, sign mega long contracts (10 years plus) and be on their merry way. Huge deal when it came to adding value to your real estate.
I have likely left out a few income angles so feel free to fill in the blanks. And, thank you ahead of time.
Budgeting Strategy
This line item is a bit different from the prior line items. That is in terms of straight lining the income based on history. Because the income is based on contractual terms and agreements you can plug the income. That is to suggest that sometimes the payments are made annually, quarterly or monthly. And, they are specific in amount. Whatever the case, review your contracts, make note of the payment amounts and months they are to be paid and enter accordingly.
Refreshing
It’s good to be writing again. I really miss this part of my world. In the same respect, it felt good to take a pause.
Your looking forward to rockin’ the world today multifamily maniac,
M
0 Responses
One interesting angle to watch will be the deals being forged between the cable companies and the cell phone providers. They’re building ways to sell a “quadruple play” of TV, Internet, landline and cellular services. If this model catches on, there will probably be an opportunity for some revenue sharing on those cellular contracts. That said, it remains to be seen how many residents will switch their cell carrier just because they’re moving into a new apartment.
One other thought here: It’s not related directly to income, but the other budgeting opportunity with phone lines is to look at which landlines can be eliminated because of newer, better technology options. Can you ditch multiple office lines for a cloud-based VOIP system? Can you replace emergency landlines for your fire systems with newer fiber-based systems? Can you switch to an IP-based security system in the leasing office? If you do some homework, there are probably at least a few ways you can cut landlines out of the annual operating budget.