Most multifamily operators don’t realize the multiple revenue-generating opportunities available to them. In this podcast, the managing partner of Multifamily Utility Solutions Kevin J. Gardner shares insider secrets on how you can generate income from sources already located on your multifamily properties.
For complete show notes go to http://olddawgsreinetwork.com/revenue-streams-for-multifamily/
00:00:00 – 00:02:34
Introduction to Old Dogs REI Network and real estate investing
00:00:00 – 00:02:34
The episode introduces the Old Dogs REI Network, sponsored by Mino Studio. It emphasizes a unique approach to income, where money works for the individual rather than working for money. The show focuses on real estate investing as a means to achieve cash flow and fulfill retirement dreams, promising straightforward and practical advice.
00:01:16 – 00:03:10
Host Bill Mannis introduces guest Kevin Gardner
00:01:16 – 00:03:10
The podcast ‘Old Dogs REI Network’ hosted by Bill Manis targets listeners aged 50 and above, offering straightforward, no-sales-pitch real estate investing advice aimed at generating passive income and cash flow. The show airs twice weekly on Mondays and Fridays, and encourages new listeners to subscribe via iTunes or Apple Podcasts. The episode focuses on managing expenses and boosting cash flow, which is especially relevant in the current economic climate requiring financial adjustments.
00:02:32 – 00:08:51
Kevin Gardner’s background in cable and multifamily operations
00:02:32 – 00:04:21
Kevin Gardner brings nearly 20 years of experience in the cable industry, including leadership roles at Comcast and James Cable. He has extensive expertise in managing sales, marketing, and customer care, particularly negotiating telecommunications access agreements for multifamily property operators. His work has helped clients secure favorable contract terms and significant savings in telecommunications, energy, and waste agreements.
00:04:28 – 00:06:07
Kevin discusses his transition from cable operations to focusing on multifamily property owners. At Comcast, he oversaw a commercial development department that negotiated contracts with property owners, gaining deep insight into the process. Seeking a more entrepreneurial environment, he started a consulting company serving major cable clients before shifting to representing property owners directly to help them realize untapped revenue opportunities.
00:06:14 – 00:08:51
Kevin explains how many property owners are initially skeptical about pursuing new revenue streams through cable and utility agreements. He highlights the contrast between luxury apartments with extensive amenities and smaller, cost-sensitive properties where owners carefully consider expenses and potential returns. The discussion touches on concerns about the feasibility and scale of such initiatives, questioning whether smaller owners with fewer units can benefit or if there is a minimum threshold for success.
00:08:19 – 00:15:35
Bulk billing vs right of entry cable contracts explained
00:08:19 – 00:10:59
The discussion begins by explaining that bulk service contracts with cable companies are typically suitable for properties with 50 or more units, with 100 units being ideal for better leverage and negotiating power. Bulk billed service allows property owners to provide cable TV and internet as an amenity at a preferred, discounted rate by buying in bulk. In exchange, owners commit to paying for every unit for a set period, usually five years, regardless of occupancy or usage. Cable companies prefer this model as it simplifies billing and reduces the risk of non-payment.
00:10:24 – 00:12:11
The bulk billing model enables property owners to mark up the discounted service rate when raising rents, potentially making the property more attractive to tenants seeking internet and cable amenities. The decision to use this model depends on factors like market conditions, rent levels, and occupancy competition. The right contract varies by property, so thorough analysis is necessary before making recommendations.
00:12:06 – 00:14:25
An alternative to bulk billing is the right of entry agreement, where the property owner grants the cable company permission to be on the property but does not purchase services in bulk. This is important because while cable companies have franchise rights to operate in public spaces, they need explicit permission from property owners to access private property and offer services to individual residents. Property owners act as gatekeepers who control access to their property for cable providers.
00:13:53 – 00:15:35
Many older properties may lack formal right of entry agreements due to changes in ownership or expired contracts, making it crucial to identify if an agreement exists. If not, owners must decide whether a bulk billing or right of entry contract best suits their needs. Each option has different implications for income opportunities and property management, requiring careful evaluation to determine the most beneficial approach.
00:14:59 – 00:23:57
Revenue opportunities from cable agreements for property owners
00:14:59 – 00:17:01
The discussion covers typical agreements between property owners and cable companies, including door fees or signing bonuses paid as a lump sum in exchange for exclusive marketing rights and property access. Another common arrangement is ongoing revenue sharing, where the cable company pays a percentage of revenue generated on the property to the owner quarterly. Owners may also set policies restricting satellite dishes due to aesthetic or damage concerns, which can benefit certain providers by limiting competition.
00:16:31 – 00:19:08
Property owners generally have the right to restrict satellite dishes on their properties by including clauses in new leases, although existing leases may complicate enforcement. While municipalities typically do not prevent owners from imposing such restrictions, they cannot retroactively force tenants with current leases to remove dishes without proper notice. Over time, as leases turn over, owners can phase out dishes by applying new policies to incoming tenants.
00:18:36 – 00:20:39
In some cases, new owners may negotiate with tenants to remove existing satellite dishes by offering incentives like free cable service for a period. Contracts with cable providers often involve exclusive marketing rights, meaning the property promotes one provider over others, but does not necessarily exclude other service providers from operating on the property. Compensation and exclusivity terms vary by negotiation.
00:20:06 – 00:22:10
Exclusive marketing agreements mean the property owner promotes a single provider through controlled channels like on-site materials and websites, though they cannot prevent other providers from marketing independently to residents. The discussion distinguishes between exclusive marketing rights and exclusive service rights, with the former being more common. Bulk contracts and revenue share deals are the main types of compensation arrangements.
00:21:42 – 00:23:57
Compensation amounts from bulk contracts or revenue sharing vary widely depending on factors such as property size, market competitiveness, and the number of available providers. Larger properties can negotiate better terms. Markets with fewer providers, especially rural areas served by a single company, often yield less favorable deals. The speaker emphasizes the importance of understanding the specific property and market conditions before negotiating agreements.
00:23:26 – 00:27:26
Expanding services beyond cable to utilities negotiation
00:23:26 – 00:25:15
The company primarily focuses on cable and internet services nationwide, but has expanded into other utilities like electric and gas through a broker partnership. However, utility negotiating opportunities are limited to deregulated markets, which only exist in about 20-25% of the country. For example, Tennessee has regulated utilities with no alternative providers, whereas Ohio is deregulated, allowing competitive rates.
00:24:36 – 00:27:26
The potential for savings on electric and gas bills depends heavily on market deregulation and the scale of utility usage. Larger properties with common areas and shared facilities have more leverage to negotiate better rates in deregulated markets. Smaller properties where residents pay individually have limited opportunities for savings. The company conducts thorough upfront research at no charge to assess whether utility negotiations are viable before entering any agreements. This approach helps clients understand their specific opportunities.
00:26:56 – 00:30:12
Common mistakes and opportunities in multifamily utility deals
00:26:56 – 00:29:32
The discussion focuses on the challenge many property owners face in generating income or reducing expenses due to a lack of awareness about available opportunities. Many residents or managers are unaware that they can increase revenues through options like cable contracts. The speaker highlights the importance of education in helping owners understand how to increase net operating income (NOI), even if the revenue increase per unit seems small, as it can significantly impact refinancing and future investments. They emphasize that having a cable contract is important even if the owner does not personally pay the bill, as it grants control over who is on the property.
00:28:59 – 00:30:12
The speaker shares success stories, including one involving a 74-unit property in Dallas, Texas. Initially, the proposal for increasing income seemed modest, but by consulting other owners in the market, they aimed to enhance the offer. This illustrates the ongoing efforts and positive outcomes achieved through strategic management and market research.
00:29:36 – 00:32:18
Success stories leveraging multiple properties for better deals
00:29:36 – 00:31:21
The speaker discusses leveraging partnerships by pooling multiple property owners together to create larger portfolios, which improves deal terms. For example, they combined a 74-unit property with others to form a 1,600-unit portfolio, making the deal more attractive. Similarly, in Louisville, they waited for an owner with under 100 units to acquire additional properties, increasing the total to about 200 units across three properties, resulting in better deals.
00:31:17 – 00:32:18
The business is growing with increasing awareness and new buyers entering the multifamily investing market, who are more research-oriented and tech-savvy. However, the market is shifting towards requiring larger minimum property sizes, such as 100 units or more, which presents challenges for owners with smaller portfolios, as some deals become less accessible under these changing criteria.
00:31:47 – 00:40:13
Industry trends and advice for investors 50 and older
00:31:47 – 00:33:42
The speaker discusses the value of hiring professionals for tasks, even if one could attempt to do them independently, using examples like changing oil or building a website. They emphasize saving time and ensuring quality by relying on experts, particularly in their own field of cable and internet contracts.
00:33:14 – 00:35:32
The conversation shifts to the evolving cable and internet industry, noting that many consumers opt for internet-only services with streaming platforms like Roku rather than traditional cable TV. Cable companies have seen profit margins shrink due to increased channel costs, leading them to prioritize internet service as their main revenue source.
00:34:59 – 00:36:44
Cable providers offer bundled video and internet services to maintain customer numbers and report favorable metrics to investors. They often provide discounted video packages to retain subscribers, while pushing internet services as the core product. The rise of cord-cutting with streaming services is significantly impacting the industry.
00:36:10 – 00:37:34
The discussion acknowledges the rapid pace of the conversation and pivots to addressing an older audience, particularly those 50 and older considering retirement. The focus is on exploring real estate investing as a viable income source during or after retirement, highlighting various investment options like single-family homes and syndications.
00:37:08 – 00:38:43
The speaker shares an inspiring anecdote about someone who began investing after 50 and became very wealthy, reinforcing that it’s never too late to start investing. They encourage listeners to envision building substantial wealth over 15 years or more, regardless of when they begin.
00:38:11 – 00:39:36
Reflecting on personal experience, the speaker notes that starting a business later in life is bold and increasingly common. Many listeners do not view retirement as an end but rather a transition to continued work, hobbies, or full-time investing, signaling a new phase rather than a conclusion.
00:39:09 – 00:40:13
The speaker expresses a strong personal desire to avoid retirement, finding fulfillment and enjoyment in their work despite occasional challenges. They highlight their active involvement in real estate investing and their ongoing commitment to stay busy, framing their work as meaningful and not just a job.
00:39:41 – 00:46:33
Rapid-fire questions: books, apps, quotes, and business tips
00:39:41 – 00:41:26
The speaker introduces a rapid-fire question segment, starting with favorite real estate books. Although not primarily an investor, they recommend books by clients of theirs, praising their straightforward, common-sense approach. They specifically mention honeybee-related authors and appreciate the educational value and ease of reading these books.
00:40:55 – 00:42:27
The conversation shifts to favorite general business books, highlighting two less conventional titles: ‘If It Ain’t Broke Break It’ by Robert Kragle, which emphasizes proactive business evaluation to stay ahead of competitors, and ‘Make Elephants Fly’ by Stephen Hoffman, which encourages believing that anything is achievable with the right approach.
00:41:55 – 00:42:57
Regarding valuable websites for success beyond one’s own, LinkedIn is identified as the top choice. The speaker notes the platform’s power for building contacts and connections, acknowledging varying levels of user expertise but emphasizing its strong potential for business growth.
00:42:26 – 00:44:07
When asked about a favorite app, the speaker admits to frequently using Facebook, primarily to stay connected with friends and family and avoid political content. They appreciate the platform’s role in sharing success stories and maintaining personal relationships.
00:42:54 – 00:44:47
Favorite quotes are discussed next, with the speaker highlighting two inspiring ones: a TS Eliot quote about the necessity of risk to discover limits, and a John Wooden quote emphasizing making the best of any outcome. Both quotes resonate deeply and guide their mindset.
00:44:09 – 00:46:00
In a hypothetical scenario of losing all assets with only $1,000 to restart a business, the speaker emphasizes leveraging cost-free methods like networking and LinkedIn rather than spending the money, suggesting that much of business growth comes from relationship-building and online engagement.
00:45:21 – 00:46:33
The discussion concludes with contact information for the speaker’s company, Multifamily Utility Solutions, including their website and email, inviting listeners to reach out for more information or questions about their services.
00:45:57 – 00:50:38
How to contact Kevin Gardner and closing remarks
00:45:57 – 00:47:41
The speaker discusses maintaining long-term relationships by answering questions and educating people, even if they don’t immediately do business together. He shares an example of a contact who grew his real estate portfolio from a four-plex to several hundred units over a few years. The focus is on building trust and providing value through ongoing conversations.
00:47:06 – 00:48:42
The host introduces a tradition on the Old Dogs REI Network where guests close the show with an ‘old hound dog howl.’ The guest shares a motivational quote, ‘all you can do is all you can do,’ before performing the howl. The segment ends on a friendly and lighthearted note, highlighting the enjoyable conversation.
00:48:04 – 00:49:56
The host thanks the guest and listeners for joining the show, expressing appreciation for their time. He reminds listeners that detailed show notes, including everything discussed by Kevin Gardner, are available on the Old Dogs REI Network website. The closing emphasizes the importance of cash flow in real estate investing and encourages listeners to keep moving forward.
00:49:08 – 00:50:38
The episode concludes with music and applause, signaling the end of the podcast. Listeners are encouraged to visit iTunes to subscribe, rate, and review the show to increase its visibility and reach more people interested in real estate investing.
