Greg and Darren have a super interesting and incredibly enlightening discussion with Kevin Gardner of Multifamily Utility Solutions. Kevin, and his company, help multifamily operators increase their NOI (net operating income) by negotiating their telecom (internet & cable) contracts. There are a couple of ways to approach the contracts and the numbers aren’t easy to pin down. Like everything else in the multifamily space, there is no one answer, it depends on the number of units, location and operators that are servicing the property, not to mention regulated vs. nonregulated industries. By the end of this podcast you will be calling up Kevin to see how his company can help your bottom line.
One great takeaway – Utilities that are not being looked at for more than the usual cursory reasons, might be worth a closer look to unlock their hidden potential.
Visit our website – https://realwealth.solutions/ – to learn more or sign up for our newsletter – https://bit.ly/RWSSignUp – for updates. Thanks for listening and, as always, a positive review or share is greatly appreciated. – Greg & Darren
00:00:05 – 00:01:36
Introduction to Multi-Family Utility Solutions
00:00:05 – 00:01:36
The episode begins with hosts Darren Light and Greg Scully welcoming their guest Kevin Gardner from Multi-Family Utility Solutions. Kevin briefly introduces himself, and the group reflects on their long-standing relationship, noting that they have known each other for about four to five years since their earlier independent business days in Knoxville. They express enthusiasm about their continued partnership and the growth they have experienced together.
00:01:06 – 00:04:18
Role of Property Owners as Gatekeepers
00:01:06 – 00:03:19
The speaker explains the role of multi-family utility solutions in helping property owners increase net operating income, primarily through managing telecommunications contracts for cable and internet. Unlike single-family homeowners who grant service providers access to their property, multi-family property owners act as gatekeepers since residents do not own the property. Therefore, cable companies must obtain access agreements from the property owners to service the residents, which holds significant value.
00:02:46 – 00:04:18
The discussion continues on the complexities of utility access agreements in multi-family properties. Multiple providers may exist in a market, and existing access agreements are often outdated, unrecorded, or lost due to property or company sales over decades. This situation creates an opportunity for property owners to generate additional revenue by renegotiating or establishing new agreements. The speaker highlights the need to start from scratch to uncover and leverage these opportunities.
00:03:50 – 00:08:17
Kevin Gardner’s Career Journey
00:03:50 – 00:05:18
The speaker shares their career journey, starting with door-to-door sales at Comcast in challenging conditions. They recall advice from a sales manager to use a golf ball to knock on doors to protect their knuckles, highlighting early experiences that shaped their approach.
00:04:48 – 00:06:31
The speaker describes progressing through various roles at Comcast, including Area Vice President in Michigan, before deciding to leave due to the company’s bureaucracy. Motivated by entrepreneurial interests, they founded a company connecting cable companies with third-party vendors for contract work.
00:05:55 – 00:07:11
The company evolved to include competitive analysis and began working with Spectrum (then Charter) to help negotiate with multi-family property owners. When these clients brought the work in-house, the speaker shifted focus to representing the property owners themselves.
00:06:35 – 00:08:17
Building on core competencies, the business expanded into Multi-Family Utility Solutions, which now occupies most of the speaker’s time due to its growth and broad market benefit. The speaker reflects on the unexpected but rewarding career path from an accounting background and notes that many people are unaware such services exist.
00:07:42 – 00:12:35
Types of Utility Agreements Explained
00:07:42 – 00:09:32
The speaker explains two types of agreements property owners can have with service providers like cable or telephone companies. The first is a right of access agreement, where the service provider gains the right to operate on the property and service the tenants, often paying the owner either a revenue share or a one-time upfront fee. Tenants pay individually in this scenario.
00:08:58 – 00:11:48
The second type is a bulk agreement, where the property owner purchases service for all units at a discounted rate and may include it in rent or as an amenity. While this can increase net operating income due to the markup, the owner assumes liability for all units regardless of occupancy or tenant usage. The speaker notes a recent trend of owners reconsidering bulk agreements due to liability concerns, especially during uncertain times like the COVID-19 pandemic, and often preferring right of entry agreements to avoid financial risk. Ultimately, the choice depends on the owner’s business goals and market conditions.
00:11:18 – 00:12:35
Deciding on the best agreement type depends on factors like market competitiveness and the owner’s capacity to manage additional responsibilities. In highly competitive markets, offering bulk services as an amenity might attract tenants, but owners with many priorities may prefer simpler arrangements. The conversation transitions to a client testimonial acknowledging prior discussions and contracts with the service provider.
00:11:56 – 00:18:44
Market Factors Affecting Contract Terms
00:11:56 – 00:14:38
The discussion focuses on different types of contracts offered by cable companies, such as right of access agreements and bulk service contracts. Bulk agreements are preferred by cable companies because they simplify billing, reduce operational costs, and improve collections since owners pay instead of individual tenants. The speaker explains that cable companies are generally willing to renegotiate right of access deals to bulk contracts but rarely revert bulk contracts back to right of access.
00:14:09 – 00:16:53
Market dynamics and competition heavily influence contract terms between property owners and cable companies. Leverage depends on factors like the number of competitors and property size. Different cable companies and markets have varying levels of generosity based on competition. The speaker advises caution in quoting fixed numbers because many variables affect negotiations. The conversation also highlights that property owners might be missing out on compensation for existing cable services on their properties.
00:16:20 – 00:18:44
When acquiring new properties, it’s common to find existing cable agreements that may have been overlooked during due diligence. These agreements might not be intentionally hidden but simply misplaced or forgotten. The speaker stresses the importance of notifying cable companies about ownership changes to ensure revenue shares are properly redirected to the new owner. This process is often handled without additional charges, leveraging long-term relationships. The contracts are described as largely hands-off once established, requiring minimal ongoing management.
00:18:13 – 00:22:04
Tenant Marketing and Revenue Share
00:18:13 – 00:20:19
The discussion explains the typical process after an owner signs an agreement with a service provider like Comcast. Property management teams and leasing agents actively promote the provider’s services during lease-ups to tenants. Revenue sharing is based on a sliding scale, incentivizing the management to increase customer adoption within the units, which boosts both the number of customers and the percentage of revenue earned.
00:20:06 – 00:22:04
Leasing agreements grant an exclusive right to market a service provider, not an exclusive right to serve, so tenants can still choose any provider available onsite. Franchise agreements regulate rates uniformly across the franchised area, ensuring tenants do not pay more despite revenue sharing with property management. This process remains transparent to residents, who experience no change before or after agreements are signed.
00:21:22 – 00:28:15
Opportunities in Deregulated Energy Markets
00:21:22 – 00:22:59
The discussion explains the concept of deregulated energy markets where consumers can negotiate with multiple energy brokers to obtain power at rates potentially lower than the regulated market rate. The speaker notes that in regulated markets like Tennessee, there is only one provider with government-set rates, whereas in deregulated markets such as Ohio, consumers have the freedom to choose their electric and gas providers, promoting competition and potential savings.
00:23:09 – 00:24:57
In deregulated markets, consumers can shop around for the best energy rates, similar to choosing where to buy gas. An energy specialist can analyze recent utility bills to identify savings opportunities, but this depends on being in a deregulated market and the amount of energy usage. The speaker suggests consulting a multi-family utility solutions website to check market status and get expert help, noting that larger properties typically receive more favorable offers.
00:24:16 – 00:25:59
Energy savings are more significant for properties with higher consumption, such as those with laundry rooms, heated common areas, or pools. Properties with lower energy use, such as those where residents pay individually or have minimal common area utilities, see less benefit. Master metering in older properties might offer savings opportunities, but overall, greater energy consumption tends to yield more substantial cost reductions.
00:26:00 – 00:27:56
The savings from energy cost reductions do not generate direct revenue sharing but positively impact net operating income (NOI) and net rentable income (NRI). Lower utility costs can also enhance a property’s competitiveness by reducing resident utility billbacks (RUBS), making the property more attractive compared to others with higher utility costs. Evaluating potential properties involves many factors that influence both revenue opportunities and cost savings.
00:27:20 – 00:28:15
The speaker, Greg from Real Wealth Solutions, invites viewers to learn more about passive income opportunities related to multi-family and flip projects by visiting their website and scheduling a call. They offer to answer questions and provide further information on these investment strategies.
00:27:51 – 00:31:05
Engaging Services During Due Diligence
00:27:51 – 00:29:45
The discussion focuses on when to engage during the acquisition process, emphasizing that earlier involvement is better, ideally during due diligence. The speakers highlight challenges in obtaining important documents like contracts before ownership transfers, noting that sellers may be reluctant to share information with potential buyers. In one case, a letter of authorization from the current owner was required to access a contract, which helped the buyer understand the situation better and press the seller for necessary details.
00:29:18 – 00:31:05
The conversation continues on the timing of contract signings, often occurring shortly after ownership changes rather than months later, stressing the importance of controlling the timeline. The speakers then shift to discussing scale, questioning if there is a preferred minimum unit count for projects and considering how scattered units or large portfolios, such as 200 units, factor into their strategy.
00:30:25 – 00:35:56
Handling Scattered and Portfolio Properties
00:30:25 – 00:32:08
The discussion focuses on leveraging scattered property portfolios for financing. While it is possible to combine units from multiple properties, lenders prefer the largest number of units in one location. Properties with fewer than 20 units typically aren’t considered unless paired with a larger portfolio to balance the total unit count, such as combining a 20-unit property with a 100-unit one to reach 120 units overall.
00:31:35 – 00:33:13
Leverage is diminished when properties are spread across different markets and cable providers, making it harder to negotiate as a single entity. However, combining multiple owners’ large portfolios in one state can have a positive impact. To facilitate this, a database is maintained to track properties, contracts, and opportunities, allowing the team to revisit previous properties for potential new deals when market conditions change.
00:32:42 – 00:34:12
The compensation model is structured so that payment is only received when the client benefits financially, emphasizing a win-win approach. The team continuously monitors their property database to seek new opportunities, often reaching out to clients if a new portfolio acquisition could enable previously unavailable deals, effectively leveraging multiple owners’ properties together without requiring formal joint entities.
00:33:42 – 00:35:24
Multiple owners maintain independence despite potential overlaps in ownership and contracts, with individual LLCs managing each property. Even when different signatories are involved, common ownership allows for combining properties in deals. This approach is similar to smaller market strategies where owners with modest portfolios partner to share property management costs, providing cost efficiency and collaboration without complex structures.
00:34:50 – 00:35:56
The conversation shifts to exploring new services beyond cable, gas, and power to stay ahead in the rapidly evolving telecommunications space, highlighting the need to adapt offerings in response to fast-changing market dynamics.
00:35:23 – 00:41:27
Evolving Telecommunications & Future Services
00:35:23 – 00:37:40
The discussion begins with how revenue share contracts have shifted over time, with video services once being the primary revenue source, followed by internet and phone. However, phone revenue has nearly vanished due to declining landline usage, and internet has overtaken video as the main service. Many consumers prefer only internet services and stream video content via platforms like Hulu and Netflix. Cable companies now often sell video as a loss leader to attract internet customers, but rising channel costs have eroded video margins significantly.
00:37:04 – 00:38:33
The conversation shifts to exploring new ways to maintain profitability in the changing market. Some third-party providers offer dedicated fiber and managed Wi-Fi networks but require significant effort. Established cable companies benefit from existing infrastructure investments, allowing them to offer more competitive pricing. The focus is on staying informed about industry trends and preparing for future opportunities despite the current margin pressures.
00:38:06 – 00:39:39
When asked about competition, the speaker acknowledges other companies offer similar services but emphasizes the large market size and their commitment to superior service and partnership. They prioritize building long-term relationships with multi-family property owners and maintaining a service-oriented approach over worrying about competitors.
00:39:09 – 00:40:46
The speaker highlights their dedication to client satisfaction, citing an example of supporting a client with multiple properties beyond their contracted locations. They emphasize the importance of ongoing service and partnership, investing necessary time and effort to ensure client needs are met. This long-term relationship approach distinguishes them from competitors.
00:40:12 – 00:41:27
The discussion closes with recognition of the strong reciprocal relationships and referrals that sustain their business. The host invites the speaker to broadly discuss future opportunities in utilities, referencing the impact of the pandemic as a contextual lead-in for the next topic.
00:40:49 – 00:49:21
Other Utility Opportunities and Partnerships
00:40:49 – 00:42:56
The discussion begins with uncertainty around revenue and collections, highlighting increased focus on utility expenses. Companies now analyze water bills to ensure proper charges and offer services such as toilet installations and Wi-Fi leak monitoring. The conversation touches on various utility-related opportunities, including cell phone towers, with an emphasis on networking and leveraging subject matter experts for specialized areas.
00:42:14 – 00:44:17
The speaker explains their role in multi-family utility solutions and reliance on partners for expertise in areas like waste removal and telecom. They share how they refer clients to specialists and vice versa, highlighting ongoing efforts to find experts, such as those involved with cell towers. Building relationships and providing helpful resources is seen as key to strengthening client connections.
00:43:47 – 00:45:26
New innovations in utilities are explored, including a company developing a valve that compresses air in water meters to reduce recorded usage legally. While not a subject matter expert, the speaker is investigating this technology further to potentially benefit clients. The discussion reflects a willingness to explore novel solutions to improve utility cost management.
00:44:53 – 00:46:28
The conversation broadens to other utility-related opportunities such as electric vehicle (EV) charging stations and solar installations on covered parking. While acknowledging the high costs involved, they note the importance of timing these investments, ideally during property acquisition. The speaker stresses the value of relying on specialized partners to deepen knowledge in these emerging areas.
00:45:56 – 00:48:34
Further discussion on EV charging stations highlights their impact on electricity usage and the importance of managing those costs effectively, possibly by shopping for better electric rates. Offering EV stations as an amenity could provide competitive advantages without extra net cost. The speaker expresses confidence that such infrastructure developments will become common in the near future.
00:48:04 – 00:49:21
The final segment reflects on how utilities are typically factored into underwriting, often with limited attempts to reduce costs beyond implementing RUBS (Ratio Utility Billing Systems). Cable services are rarely considered in cost-saving strategies except to avoid visible equipment like rooftop dishes. This underscores that many utility-related savings opportunities remain underexplored.
00:48:44 – 00:51:02
Service Area and Market Coverage
00:48:44 – 00:50:35
The speaker discusses their company’s operations across multiple states, highlighting partnerships with major cable providers such as Suddenlink, Sparklight, Comcast, WOW, and Cox Communications. They estimate coverage of about 80% of the U.S. market, excluding some small rural areas where cable companies dominate due to lack of competition.
00:49:55 – 00:51:02
The conversation shifts to the importance of referrals in driving business growth, emphasizing the value of educating customers about available services. Despite increased awareness over the past few years, there remains a segment of people unfamiliar with the offerings, indicating ongoing need for outreach and education.
00:50:28 – 00:54:07
Growth in Multi-Family Investing and Education
00:50:28 – 00:51:55
The discussion highlights the growing interest in multi-family investing, noting an influx of new investors entering the market. The speakers reflect on their own early experiences and emphasize the importance of education and mentorship. They share how initial conversations evolved into longer-term relationships, helping others navigate the multi-family investment landscape.
00:51:25 – 00:53:08
The speakers describe how mentoring others has led to tangible successes, such as a friend who expanded from 12 units to closing on a 65-unit property. They stress the value of investing time to educate and support newcomers because multi-family investing is an excellent business opportunity. The conversation also touches on the impact of the pandemic, which shifted focus toward expense management and fundamentals in property management.
00:52:30 – 00:54:07
The segment discusses the transition from traditional mom-and-pop property management to a more business-oriented approach, which helps investors remain competitive and maximize cash flow. The speakers encourage listeners to reach out for advice and support, emphasizing the mutual benefits of investing in education. They conclude by sharing how to schedule time to connect with Kevin for further guidance.
00:53:34 – 00:55:24
Contact Information and Closing Remarks
00:53:34 – 00:55:24
The speaker invites listeners to contact multifamilyutilitysolutions.com to schedule a meeting, typically about 15 to 30 minutes, to answer questions and connect them with the right people. They mention that contact information and other details will be provided in the show notes. The podcast host thanks the audience for joining the Real Wealth Solutions podcast, encourages sharing the episode with others who might benefit, and signs off until the next episode in about a week.
