Kevin joins host Josh Appelman on Real Estate Hustler’s podcast. Kevin shares how Multifamily Utility Soltuions (MUS) has helped property owners across the country generate revenue on the internet and video services offered to their tenants. This is accomplished through their expertise in negotiating favorable terms with telecommunication providers, which can yield lucrative compensation for MUS clients. Kevin also shares how his partnerships with various utility specialists can provide comprehensive solutions for many multifamily utilities.
00:00:00 – 00:01:03
Introduction to Real Estate Hustlers podcast
00:00:00 – 00:01:03
The introduction explains that evaluating real estate properties requires different approaches depending on each unique property. The podcast, Real Estate Hustlers, features interviews with investors and entrepreneurs who share their successes, failures, lessons, coaching, and news analysis to provide effective real estate strategies.
00:00:31 – 00:02:46
Guest Kevin Gardner’s background and achievements
00:00:31 – 00:02:46
The podcast episode begins with host Josh Appelman introducing Kevin Gardner, president of Multifamily Unity Solutions, highlighting Kevin’s extensive background including 20 years at Comcast and his significant achievements in boosting NOI and asset values. Kevin shares his career journey, starting in the cable and internet industry with Comcast, and eventually transitioning to entrepreneurship by founding his own company. Initially, his firm represented major clients like Spectrum and Comcast Xfinity, negotiating service agreements with apartment and mobile home community owners, until these clients internalized the work.
00:02:10 – 00:03:42
Representing property owners in cable/internet negotiations
00:02:10 – 00:03:42
The speaker explains that in 2012 they began representing property owners and management companies in negotiations with cable and internet providers. This shift allowed them to help add internet services to residential complexes, offering tenants additional service options and creating a new revenue stream for property owners. They emphasize that each property is unique, requiring tailored approaches based on the owner’s goals and the specific characteristics of the property to maximize revenue from cable and internet services.
00:03:11 – 00:07:03
Bulk contracts versus revenue share explained
00:03:11 – 00:05:31
The segment discusses offering bulk contracts for internet or cable services as an amenity in rental properties. This involves purchasing services at a reduced rate and charging residents a premium, similar to other amenities. This approach is more common in Class A and larger properties in certain markets. An alternative is partnering with cable or internet companies to market their services to residents, earning a percentage of the revenue without fixed expenses. The bulk contract method can yield higher profits but comes with fixed monthly costs, while the marketing partnership offers lower risk and lower reward.
00:04:54 – 00:07:03
For a bulk contract on a multi-family portfolio, the property owner pays for all units regardless of tenant usage and then recoups costs by charging tenants directly or including the cost in rent as an amenity. The decision to implement such agreements should be evaluated like other amenities, such as a pool or fitness center, by considering if it will pay back the investment through increased rent or occupancy. The discussion also touches on tenant demographics best suited for these agreements, noting they tend to work better in larger, Class A properties.
00:06:29 – 00:08:37
Tenant demographics and property class impact
00:06:29 – 00:08:37
Residents in higher-quality properties tend to focus more on amenities like workout facilities, pools, and included internet, rather than just rent cost. Conversely, residents in lower-tier properties, especially C-Class and lower B-Class, are more price sensitive and prioritize affordable rent over amenities. Bulk internet services are less common in C-Class properties because reducing occupancy through higher costs can negatively impact revenue, and maintaining high-paying occupancy is crucial. The challenge lies in balancing offering amenities like internet while competing with alternative, sometimes free, internet options available to tenants.
00:08:06 – 00:11:30
Long-term goals and contract flexibility
00:08:06 – 00:10:56
The discussion focuses on property asset class decisions and long-term goals, particularly regarding bulk agreements versus revenue share agreements. Bulk agreements are preferred by providers because they simplify billing and operations, but they typically lock clients in without easy exit options. Revenue share agreements offer more flexibility, allowing clients to switch to bulk if desired. The importance of understanding these contract types is emphasized, especially in relation to potential property sales and buyer preferences.
00:10:16 – 00:11:30
Contract durations vary, with bulk agreements usually lasting three to six years, while revenue share agreements often span around ten years but can convert to bulk for flexibility. The speaker reflects on experiences where bulk contracts potentially impacted property sales, noting no clear cases of sales being hindered but implying that such contracts can influence transactions.
00:10:55 – 00:19:38
Challenges and experiences with bulk contracts
00:10:55 – 00:13:06
The speaker discusses challenges clients face with bulk service agreements, including difficulty exiting contracts once signed. One client experienced issues after six months due to rent increases meant to cover internet costs, which led to pushback from residents who did not value the amenity enough to pay extra. This situation highlights the importance of understanding market conditions and resident preferences before committing to bulk services.
00:12:34 – 00:14:22
The speaker emphasizes the importance of due diligence before implementing bulk internet services, such as surveying residents to gauge interest and obtaining data from providers on current service penetration and revenue. They advise waiting to implement bulk services until after renovations are complete to ensure higher occupancy, as paying for all units regardless of occupancy can increase costs effectively per occupied unit.
00:13:45 – 00:15:45
The discussion compares bulk and shared revenue models, noting that shared revenue is lower risk but usually offers lower returns compared to bulk if occupancy is high and bulk pricing works well. Bulk can generate significantly more income per unit, but shared revenue provides steady, lower-effort income by allowing providers preferred marketing rights without locking residents into service.
00:15:05 – 00:16:44
Negotiating between property owners and service providers can be challenging due to differing expectations and the influence of property size on leverage. Larger properties typically secure better deals, while smaller properties struggle to get comparable terms. The speaker recounts instances where owners of small properties expected deals similar to those of larger ones, which was often unrealistic.
00:16:15 – 00:18:33
The speaker explains how establishing contracts where none existed previously can increase net operating income (NOI) for properties. They describe their process of reviewing client property portfolios to identify existing agreements, which may be overlooked during property sales, sometimes resulting in revenue shares being paid to previous owners. Their database tracks contracts and upcoming renewals, enabling proactive management.
00:17:59 – 00:19:38
By managing contract renewals actively, the speaker helps clients secure additional upfront ‘door fees’ at renewal points, which are one-time payments incentivizing new agreements. Avoiding automatic renewals allows negotiation for these fees alongside continued revenue sharing. They highlight a current example with a client in the Carolinas benefiting from hundreds of thousands in additional fees due to such proactive contract management.
00:19:08 – 00:28:12
Other utility partnerships and NOI increase strategies
00:19:08 – 00:22:14
The discussion centers on various partnerships aimed at increasing NOI and creating diverse revenue channels for properties. The primary focus is on internet contracts handled in-house, but there are also partners specializing in trash, electric, gas, and water conservation through a patented valve. The applicability of these solutions varies by property size and location, with deregulated markets like Northeast Ohio offering competitive pricing opportunities for electric and gas contracts. The approach begins with internet and cable contracts, followed by tailored recommendations based on property specifics.
00:21:38 – 00:24:34
The conversation explains the function and benefits of a flow saver valve used in water conservation. This valve is installed on the property side of the water meter and reduces water usage by removing gas and excess water, resulting in a 10-15% reduction in actual consumption. Property owners receive a free assessment and can choose between a shared savings payment model or an outright purchase, depending on their business model and capital preferences.
00:24:00 – 00:26:02
The company offers free site surveys and assessments, charging only a commission based on the savings they generate for clients. This aligns their interests with the clients’, as both benefit from maximizing savings. The focus is on establishing long-term partnerships rather than short-term gains, ensuring continuous support as clients acquire more properties.
00:25:31 – 00:27:10
Clients are encouraged to take advantage of free assessments by submitting property portfolios. Even if existing contracts are in place, the company helps identify if revenue is going to previous owners and assists in rectifying those issues at no cost. The goal is to foster long-term relationships by supporting all properties in a client’s portfolio, regardless of who initially negotiated the contracts.
00:27:09 – 00:28:12
The speaker stresses the importance of early engagement with their services during due diligence, as contracts can sometimes be lost or overlooked over the years. They offer to investigate and uncover any missing contracts to help maximize property value. The conversation concludes with appreciation for the insights shared on utility savings and a commitment to ongoing collaboration.
