budget
Apartment Budgeting: Internet Income
Continuing along with the Apartment Budgeting series today. The topic this week is Internet Income. This provides another opportunity to share in the revenues created by your allowance for exclusive marketing access.
Internet Income Defined
Internet Income can be defined in a very simple way – it is revenue share from your local Internet Service Provider (ISP). Not unlike revenue share from cable companies – you have to give up some exclusivity. That is to suggest that you have to provide exclusive marketing opportunities to the provider in exchange for the share of revenue. Item of note: Don’t confuse exclusive marketing with exclusive access. In essence, the only thing you want to give up is the ability for one company to market their services exclusively. It will not mean that your resident is limited in their choice. And, choice is a good thing. Good for residents and good for owners.
For apartment owners, internet revenue share comes in a couple of different forms:
1. An upfront per door fee.
2. A percentage of monthly revenues generated from total collections on billable subscriptions. More simply said, collecting a percentage of every dollar that your resident base pays to the internet provider.
3. A combination of both. You may get a lower per door fee and a higher percentage of share. Or, a lower percentage share and a higher per door fee.
4. Bulk – you buy internet for every door in the community for a base rate and then resell it for a profit. For example: you buy it for $15 per door and sell it for $25 and keep the $10 margin for yourself.
When it comes to negotiating a deal – I would recommend consulting with a guy like Mike Whaling. He has the expertise to negotiate the best possible revenue sharing opportunities that first and foremost provide your resident base with the best possible choices in service.
*One item of note – I’ve not lived in a market where internet revenues were shared with property owners. Therefore, I don’t have a lot to share in the way of norms.
**Another item of note – As the internet becomes more ubiquitous sharing opportunities might move to smart phone carries in lieu of cable/internet providers.
Internet Income Budget Strategy
This is a math problem any way you look at it. And, it is all predicated on penetration otherwise known as subscriptions. One thing to consider is the economy as a whole. The reason being that people get behind on the their internet bills just like they get behind on their rent. Except in this case, internet is likely something that is easily sacrificed where a home is not.
My best advice is to call your ISP representative and ask him/her to run a twelve month trailing report for you property and like kind properties. Use that to look forward and consider any stop service percentages that might be included.
Your always looking for ancillary income multifamily maniac,
M
Apartment Budgeting: Washer and Dryer Income
It’s Tuesday and we are back with another installment of Apartment Budgeting. Today we are writing about income opportunities as it relates washers and dryer income. Believe it or not this is an area where you can make a little ancillary income with just a little amount of effort.
Washer and Dryer Income Defined
This is money your community makes when you help someone lease a washer and dryer for their apartment. We are presupposing you have washer and dryer hook-ups in your apartments. If you do, simply find a local appliance provider that is willing to lease direct to your resident(s) while providing you a share of the revenue. Or, you lease the machines from the provider and re-lease them to your residents for an up charge. I personally like the first option better – less risk. It’s not a ton of money but every dollar counts.
The goal in my head is to make at least $10 to $15 per set per month depending on where you are in the country. Be it through the vendor revenue share option or your up-charging the resident, the aim is $10 to $15 per month.
Budgeting Strategy
If your lease program is already in place, this is a simple exercise of running out your current income based on your trailing information. If you are starting up a program, I would be conservative in the first year. And, use a conservative ramp up schedule for future years. Maybe start with two to five sets of machines depending on the level of interest you think you can generate. And, ramp up at the same pace unless demand allows for a more aggressive schedule.
Marketing Washers and Dryers
This is grass-roots kind of stuff whereby word of mouth is likely your most powerful medium. Get the conversation started by providing information in all of your marketing materials to include any print and all internet. Make sure your leasing team makes it a part of their programming. Give the first set away in lieu of any leasing special you might be offering.
It’s not huge money but again, every dollar counts when budgeting and running a multifamily community.
Your really liking ancillary income opportunities multifamily maniac,
M
Apartment Budgeting: Laundry Income
To continue with our Apartment Budgeting conversations; this week we are penning on the subject of Laundry Income.
Laundry Income Defined
Laundry Income can otherwise be termed as revenue share. This comes in the form of upfront concessions given at the time of contract signing. Or, in the way of refurbishment of your laundry facility. In addition to the aforementioned, one can negotiate a long-term share of washer and dryer collections. The payments can be set to arrive monthly or quarterly.
There are an endless number of ways that these contracts can be negotiated ranging from the vendor coming out-of-pocket to completely update your laundry facility to paying for a small share. In lieu of that, you can negotiate for a larger share of the ongoing revenue and forego the upfront incentives. You really have to consider this on a case by case basis. And, if you don’t know which way is best – reach out and ask.
Laundry Income Budgeting Strategy
If you are setting up anew – request a collection analysis from your vendor of choice. Ask them to pull trailing data from a comp that is similar in size and demographic. Consider drivers that could cause differences in your property versus another. Drivers such as; in unit washers and dryer connections, in unit washers and dryers present in select units, usability of room (is it centralized or located in the basements of each building), number of machines in the room, etc.. All things should be considered to give you a fair idea of what to budget.
If you are set and forecasting the new year – consider your most recent twelve to eighteen months trailing. Consider any foreseeable causes for disruption to up or downside. And, consider your timing. Plug the numbers accordingly.
Laundry Income Marketing Strategy
Not to over stress the marketing is everything mantra but it really is and producing Laundry Income is no different. Make sure you rooms are dialed in multiple times throughout the day. Make sure that the floors are swept and mopped. Make sure the folding tables are clean and free of clutter. Make sure the trash cans are emptied regularly. Make sure the machines are clean to include the lent traps. And, make sure the lighting is 100% working 100% of the time.
And, by all means – hand out free tokens or swipe cards from time to time. Host a – do your laundry for free – happy hour every Wednesday night. Call is Duds and Suds – they bring the duds you supply the suds. Make it social. Have T-shirt folding races. Have the neatest fitted sheet folding contest. Blow it all out on Facebook. Share the love of duds and suds. Above all – give people are reason to love the laundry room so that they come back and spend money using your machines.
Your lovin’ laundry income multifamily maniac,
M
Prop pics: Apartment Therapy
Apartment Budgeting: Lease/Short Term Premium
Back for another week of budget talk. Hope this past week has been over the top and amazing for all of you. If not, you have a whole life of potential in front of you so don’t fret too much. Last week we talked about Month to Month Premiums and this week are moving on to Apartment Budgeting: Lease/Short Term Premium.
Lease/Short Term Premium Defined
Lease/Short Term Premium is a fee that is added to any lease that is less than the desired six, nine or twelve month lease that most of us non-revenue management practitioners desire. Call is a fee of convenience if you will. It allows a resident to have flexibility in the way of getting out of the lease contract without any lease break penalties. It is a simple month to month premium that you tack on at the initiation of the lease term.
I have seen this fee applied in the way of a flat fee ranging from $50 to $100/mo. And, I have seen it applied as a percentage of the lease rate ranging from 5% to 10%/mo.
Lease/Short Term Premium Budgeting Strategy
I typically consult a twelve month trailing report to determine what my forward-looking twelve month budget number should be. This is again one of those fees that is very hard to budget for given the fact that is simply random in nature. Unless you are located in a somewhat urban area with a propensity to attract corporate type clientele, you will rarely book income to this line item.
Marketing Short Term Leases
Don’t forget that everything is marketing. And, this line item should prompt you to look for marketing opportunities. Use Short Term Leases as a bullet point on your website. But, don’t get too crazy as you don’t want to create unwanted exposure. But, it would not be a bad idea to let two to three percent of your unit count produce some extra revenue.
Your looking for opportunity in every line item multifamily maniac,
M
Insufficient Notice Fee
What is an insufficient notice-fee? Simply put, it’s an acceleration of rent due to giving a notice that does not meet the necessary lease protocol.
I am back for the weekly (save last week – vacation) budget installment. I took some time off last week and ultimately (save a pic post here and there) unplugged. All I can say is – DO THIS. Give yourself three to five days off every quarter and get away from everything. It’s good therapy. So – this week, we are talking about the Insufficient Notice Fee.
Insufficient Notice Fee Defined
What is an insufficient notice-fee? Simply put, it’s an acceleration of rent due to giving a notice that does not meet the necessary lease protocol. For example, Mills Properties requires a 60-day notice before move-out.
Budget Strategy
The Insufficient Notice Fee is a line item that you can budget based on T-12 (Trailing 12 months) information. The frequency is random, so there is a real chance that you could estimate for four based on your trailing information and end up with two or six. You will likely never be precise with this number. In the same respect, you will probably never be too far off.
It’s short and sweet this week. And it’s hot in #STL.
Your trying to keep cool in the 100+ temps multifamily manic,
M
