Kevin joins Host Rama Krishna as a Guest Speaker on the Multifamily 360 Virtual Summit. Watch the video to find out how Property Owners can make incremental revenue from the Internet & Cable service provided to their residents. Find out about the different types of agreements, the pros & cons of each, and the FREE Assessment his company offers.
00:00:04 – 00:01:22
Introduction and speaker background
00:00:04 – 00:01:22
Kevin Gardner from Multifamily IT Solutions introduces himself and begins his presentation on monetizing multifamily internet and video access. He mentions his company’s focus on utilities and sets the stage for the discussion.
00:00:44 – 00:02:34
Property permissions and revenue potential
00:00:44 – 00:02:34
The speaker explains how property owners can generate revenue from cable and internet video access rights held on their properties. While residents typically have a direct relationship with service providers, these providers are only granted franchises to operate in public easements by municipalities. Providers still need permission to access private property, which homeowners grant when subscribing to services. In multifamily properties, the property owner acts as a gatekeeper, controlling access for cable and internet providers who want to serve the residents, their potential customers.
00:01:58 – 00:03:16
Types of agreements overview
00:01:58 – 00:03:16
The discussion focuses on the value of allowing others on your property and how this value depends on the type of agreement made. Common types of agreements include bulk build and exclusive marketing, which will be explained in detail. Less common agreements, such as non-exclusive marketing, are also mentioned but are noted to generate less revenue.
00:02:38 – 00:04:48
Bulk build service agreement details
00:02:38 – 00:04:48
The segment explains bulk build service agreements, which involve paying for services like video or internet for all residents, treating it as an amenity. These agreements usually last five years plus a one-year ramp period. The ramp period is crucial because it allows the cost to be gradually included as leases expire or new tenants move in, preventing sudden expense increases. This structure typically offers the highest incentives for the property manager or owner.
00:04:05 – 00:06:06
Door fee incentives and benefits
00:04:05 – 00:06:06
The speaker explains the concept of a door fee, which is a one-time payment per unit paid by video or internet providers as an incentive to enter into bulk build agreements. These agreements can be financially beneficial, potentially increasing profit per unit through markup. However, while residents may benefit from favorable rates compared to standard retail service rates, property owners must raise rent to cover the costs. The speaker also notes increased exposure and liability associated with bulk build agreements.
00:05:27 – 00:09:58
Bulk agreement drawbacks and costs
00:05:27 – 00:07:11
The speaker explains that after a one-year ramp-up period, property owners are obligated to pay for 100% of their units’ service fees, regardless of occupancy or tenant usage. This bulk billing model means owners must factor these fixed costs into their expense calculations. They advise owners to treat bulk internet service as an amenity, similar to a pool or fitness center, carefully analyzing potential rent increases and tenant usage against the cost.
00:06:38 – 00:08:32
Bulk service agreements are typically non-cancellable unless the owner buys out the remaining payments, often at full price or a slight discount. Providers like AT&T, Comcast, and others strongly prefer these agreements and offer little flexibility for termination. Additionally, the Affordable Connectivity Program (ACP) offers subsidies to some residents, mostly in B and C class properties, but once bulk service cost is included in rent, those residents lose their subsidies and might pay more overall.
00:07:55 – 00:09:58
The loss of government subsidies through the ACP can cause some residents to pay more for internet service when bulk costs are incorporated into rent. New tenants may have promotional rates that are often lower than retail prices, which could complicate recouping costs through bulk billing. The speaker emphasizes the complexity of deciding if bulk internet service is suitable, especially if the provider is new to the property, as this may introduce additional logistical challenges such as managing on-site workers.
00:09:17 – 00:15:24
Exclusive marketing agreement explained
00:09:17 – 00:11:08
The segment explains the exclusive marketing agreement (EMA), where a property grants one provider exclusive marketing rights to residents without preventing agreements with other providers, except bulk service. The property promotes this provider to new residents at no cost, with residents signing their own agreements. The property owner receives a one-time incentive and revenue share from the provider, typically paid quarterly.
00:10:30 – 00:12:22
EMA contracts usually last about 10 years, and compensation may decrease if the term shortens. Benefits include no expenses or liabilities for the property owner, and the option to convert EMA to bulk agreements later, though not vice versa. Revenue share and one-time incentives are received upfront and ongoing, with no disruption to residents.
00:11:46 – 00:13:36
The exclusive marketing agreement is transparent to residents with no on-site disruptions, but revenue share might be less than what could be earned with a bulk markup. A financial example compares rents and internet costs under bulk and marketing agreements, showing potential income differences and associated risks.
00:13:41 – 00:15:24
Non-exclusive marketing agreements allow multiple providers with lower compensation compared to EMAs but multiple revenue streams. Access-only agreements grant providers easement rights on property without compensation. The segment concludes by hinting at guidance on selecting the best agreement type for a community.
00:14:51 – 00:18:20
Choosing the best agreement and assessment
00:14:51 – 00:16:32
The discussion focuses on factors influencing decisions about bulk service providers for properties. Important considerations include market competitiveness, the number and generosity of providers, and competition from other properties already offering bulk services. Investment goals, such as long-term holding versus short-term repositioning, also affect the type of agreements pursued.
00:15:59 – 00:17:41
Property class plays a significant role in deciding bulk service options, particularly regarding how many residents qualify for assistance programs. A free assessment is offered, requiring property details like name, address, and unit count. The assessment helps determine the best options, with the final decision resting with the property owner entering the agreement.
00:17:07 – 00:18:20
Cost per unit for bulk services varies depending on the provider and whether video, internet, or both services are included. Negotiations might lower rates but could involve concessions like reduced door fees. The free assessment provides precise cost data to help property owners evaluate feasibility within their business models, emphasizing the importance of having accurate information before making decisions.
