Getting More Revenues from Existing Properties Without Raising the Rents

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Presented at Bob Cain\'s Rental Property Conference in March 2007, Tucson, Arizona.

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Getting More Revenues from Existing Properties Without Raising the Rents

  1. 1. Squeeze It! Getting More Revenues from your Existing Properties Without Raising the Rents Jeff Takle (617) 395-7723 [email_address] March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  2. 2. Market Landscape <ul><li>34 million rental properties in U.S. </li></ul><ul><ul><li>15 million owned by individuals who do not use a property manager </li></ul></ul><ul><ul><ul><li>80% of SFH owners manage themselves </li></ul></ul></ul><ul><ul><ul><li>33% of MFH owners manage themselves </li></ul></ul></ul><ul><li>Housing expenses make up 30% avg. of total personal income in U.S.— single biggest ticket item in America </li></ul><ul><li>Average rents </li></ul><ul><ul><li>$1,146 across the U.S. </li></ul></ul><ul><ul><li>$1,560 in Boston </li></ul></ul><ul><li>Rents are projected to rise 4%-5% over the next year </li></ul><ul><li>While >90% of auto loans and >83% of mortgages are paid electronically, less than 6% of rents are. Up from 1% in 2003. </li></ul><ul><li>In 2006, landlords will collect $400-$600 billion in rent! </li></ul><ul><li>You are more successful than any other company in 1/3 of American households – tenants spend more on your “product” than anything else! </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  3. 3. You’re more successful than… <ul><li>Uncle Sam </li></ul><ul><li>Ford motor company </li></ul><ul><li>Health insurance </li></ul><ul><li>Airline tickets to see loved ones </li></ul><ul><li>You are more successful than the iPod, Kraft macaroni, and XBOX combined! </li></ul><ul><li>But let’s look at how they operate… </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  4. 4. <ul><li>Do they only sell iPods @ $199? </li></ul><ul><ul><li>songs ($1 ea) </li></ul></ul><ul><ul><li>headphones ($9) </li></ul></ul><ul><ul><li>accessories ($30) </li></ul></ul><ul><ul><li>warranties ($20) </li></ul></ul><ul><ul><li>plus Nano , Shuffle , Mega … </li></ul></ul><ul><li>Move Upstream, </li></ul><ul><li>Product customization, and </li></ul><ul><li>Related services, the “upsell” </li></ul>The iPod March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  5. 5. <ul><li>Do they only sell the Mustang GT @ $25k? </li></ul><ul><ul><li>Financing ($2,000) </li></ul></ul><ul><ul><li>Extended warranties ($495) </li></ul></ul><ul><ul><li>Maintenance in-house (+$100/visit) </li></ul></ul><ul><ul><li>Luggage rack, 12-cd disc changer… ($895) </li></ul></ul><ul><ul><li>Rust proofing, undercoating…($200) </li></ul></ul><ul><ul><li>plus Escort, Voyager, F250 … </li></ul></ul><ul><li> Move Upstream, </li></ul><ul><li>Product customization, and </li></ul><ul><li>Related services, the “upsell” </li></ul>Ford Motor Company March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  6. 6. Can we use this model? <ul><li>Move Upstream </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona Product customization Related services + + = Greater Revenues
  7. 7. Moving Upstream <ul><li>Have a license? Get referral fees: </li></ul><ul><ul><li>Relocation services </li></ul></ul><ul><ul><li>Real estate sales/rental agent </li></ul></ul><ul><ul><li>Moving companies </li></ul></ul><ul><ul><li>Moving supplies </li></ul></ul><ul><ul><li>Debt consolidation </li></ul></ul><ul><ul><li>Credit card origination </li></ul></ul><ul><ul><li>Re-branded credit card for apt complex </li></ul></ul><ul><ul><li>Free home-buying course </li></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Affiliate marketing programs through www.LinkShare.com , Commission Junction, NSC Reporting… </li></ul></ul></ul><ul><ul><ul><li>Meet and talk with people </li></ul></ul></ul><ul><ul><ul><li>Make phone calls </li></ul></ul></ul><ul><ul><ul><li>Don’t reach for too much </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><li>Annual benefit for a 4-unit = $50-$2,000 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  8. 8. Moving Upstream <ul><li>2. Seller financing and “Rent-to-own”: </li></ul><ul><ul><li>Restructure rent to include option consideration </li></ul></ul><ul><ul><li>Can place “extra” rent into escrow ( ▼return) or money market (▲return) </li></ul></ul><ul><ul><li>Or, offer to partner with renters if they want help buying a new place </li></ul></ul><ul><ul><ul><li>Hard money </li></ul></ul></ul><ul><ul><ul><li>Options </li></ul></ul></ul><ul><ul><ul><li>Referral </li></ul></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Ask tenants if they would be interested </li></ul></ul></ul><ul><ul><ul><li>Put out a few “Rent to Own” ads in addition to “For Rent” </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><li>Annual benefit for a 4-unit = $0-$??? </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  9. 9. Moving Upstream <ul><li>3. Renting to military TDY personnel: </li></ul><ul><ul><li>This exists so service members can afford Holiday Inn, 30 days a month </li></ul></ul><ul><ul><li>Only works with long-term temporary duty at military bases </li></ul></ul><ul><ul><ul><li>Reservists activated for 6+ months service </li></ul></ul></ul><ul><ul><ul><li>Long military schools (War College, fellowships, nuclear power…) </li></ul></ul></ul><ul><ul><li>Set up lease to include various “value added” services </li></ul></ul><ul><ul><ul><li>Rented furniture, plasma TV, kitchen upgrades, stainless appliances, washer/dryer, computer </li></ul></ul></ul><ul><ul><ul><li>Real estate “Option” </li></ul></ul></ul><ul><ul><li>Must justify charging maximum per diem rates </li></ul></ul><ul><ul><ul><li>$60-$150 / day, or $1,800 - $4,500/mo. Wrap regular lease (at normal rates) plus added features into new max per diem SuperLease </li></ul></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Contact base housing office, travel claims office, and/or commands directly. Advertise your full service rental. Under price, say “At Per Diem Rates” </li></ul></ul></ul><ul><ul><ul><li>Reference “additional terms in addendum” in the lease. Put all added features into addendum. </li></ul></ul></ul><ul><ul><ul><li>When tenant pays rent, provide written receipt for “Rent at 123 Main Street #4”. Tenant submits rental receipt into monthly travel claim and is reimbursed at full per diem rates. </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><li>Annual benefit for a 4-unit = $27,840 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  10. 10. Product Customization <ul><li>4. Security Deposits </li></ul><ul><ul><li>What is the Surety Bond? </li></ul></ul><ul><ul><li>Offer “Security deposit options for tenants with good credit” </li></ul></ul><ul><ul><ul><li>No security deposit, if +$25/mo rent </li></ul></ul></ul><ul><ul><ul><li>Security fee $300 in lieu of deposit, acts like an insurance deductible. </li></ul></ul></ul><ul><ul><li>$1,000 or 12 x $100 ($1,200) being “fee” for spread out program </li></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Determine acceptable “fee”/$1,000 based on your history </li></ul></ul></ul><ul><ul><ul><li>Write no more than 3 options. Create document called “Security Deposit Options” and type out three programs in general terms. Print out 20 hard copy. </li></ul></ul></ul><ul><ul><ul><li>Provide this with every rental application. </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><ul><ul><li>Good tenants with less cash can afford to move in – when weighing two closely matched alternatives, the one that requires $2,000 less cash to move in is far more attractive </li></ul></ul></ul><ul><ul><ul><li>You retain all rights to pursue for damages beyond deductible. NO arguments over dirty floors or $20 light fixtures on move out. </li></ul></ul></ul><ul><li>Annual benefit for a 4-unit = $1,200 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  11. 11. Product Customization <ul><li>5. Fun with Rental Application Fees! </li></ul><ul><ul><li>Charge everyone a fee; rebate if application is approved </li></ul></ul><ul><ul><li>Do not take a unit off market while reviewing applications – keep taking apps + fee </li></ul></ul><ul><ul><ul><li>Provide written Tenant Screening Policy up front; first tenant who qualifies gets the unit </li></ul></ul></ul><ul><ul><li>Make it easy to fill out an application – they take it home, they will never return </li></ul></ul><ul><ul><ul><li>Bring a laptop to viewing and let them submit an application right there </li></ul></ul></ul><ul><ul><ul><li>Give them paper copy but encourage them to fill it out online </li></ul></ul></ul><ul><ul><li>Free iPod (iTunes, whatever) to accepted tenant to encourage applications </li></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Draft or obtain a Tenant Screening Policy </li></ul></ul></ul><ul><ul><ul><li>Create or obtain a website that takes applications (less paperwork, faster processing) </li></ul></ul></ul><ul><ul><ul><ul><li>If you meet with a prospect and they walk away, even with an application in hand, there’s a 90% chance you’ve lost them. That’s true in person and online. Make or use systems that keep them engaged, answer all their questions, offer incentives, and give near instant approval. Don’t suffer a Craigslist email-barrage death! </li></ul></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><ul><ul><li>A written Tenant Screening Policy provided up front results in lower overhead, lower cost, and far less time showing the unit to people who will not qualify, </li></ul></ul></ul><ul><li>Annual benefit for a 4-unit = $50-$200 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  12. 12. Product Customization <ul><li>6. Lease non-standard equipment to residents </li></ul><ul><ul><li>People like to customize their home. Offer a list of add-ons to their apartment. </li></ul></ul><ul><ul><ul><li>Computers: Take old computers, depreciate, then lease to tenants as all-in-one package </li></ul></ul></ul><ul><ul><ul><li>Parking: Take open parking and turn into assign spaces. Price CHEAP. </li></ul></ul></ul><ul><ul><ul><li>Laundry: Buy and depreciate. Lease monthly, unlimited service, $10-$20/mo. </li></ul></ul></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona Subscription pricing This is the major pricing trend. jump on it! <ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Provide all tenants with a “Customize Your Unit!” checklist prior to move in </li></ul></ul></ul><ul><ul><ul><li>As tenants sign up for equipment you don’t own, go buy it and deliver (inexpensive). Or go to Rent-A-Center and add +10% for your service (expensive). </li></ul></ul></ul><ul><ul><ul><li>Option: purchase or lease coin laundry </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><ul><ul><li>Tenants feel more at home since they helped design it. Plan pricing sheet to cover depreciation and replacement costs and estimate overall lifespan. You can always eBay or Craigslist old items </li></ul></ul></ul><ul><li>Annual benefit for a 4-unit: Computers = $720 </li></ul><ul><li>Parking = $240 </li></ul><ul><li>Laundry = $480 </li></ul>
  13. 13. Product Customization <ul><li>7. Rent additional space as “Storage Unit” </li></ul><ul><ul><li>Take large common area, extra room, backyard shed, basement, or attic, and turn it into secure storage units. </li></ul></ul><ul><ul><li>Give one storage space with each unit “free”. </li></ul></ul><ul><ul><li>Charge $5-$10/month for each additional space </li></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Buy $200 in lumber and spend a Saturday building separated units </li></ul></ul></ul><ul><ul><ul><li>Padlocks and chicken wire are ok, but wooden doors with keys are better </li></ul></ul></ul><ul><ul><ul><li>Provide all tenants with a “Customize Your Unit!” checklist prior to move in </li></ul></ul></ul><ul><ul><ul><li>Provide boxing & storage supplies for a nominal fee </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><ul><ul><li>Tenants get comfort of having secure storage, private space, flexibility to expand </li></ul></ul></ul><ul><li>Annual benefit for a 4-unit = $240-$480 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  14. 14. Product Customization <ul><li>8. Enhanced alarm or security measures </li></ul><ul><ul><li>Offer a list of security add-ons to their apartment. Some people are VERY security conscious. They will pay for the services, installation, etc. and you get to keep the installed hardware. </li></ul></ul><ul><ul><li>For security monitoring systems, use referral links to make $80 per signup </li></ul></ul><ul><ul><ul><li>https://order.ucontrol.com/?oc=bbn </li></ul></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Sign up for free at Commission Junction </li></ul></ul></ul><ul><ul><ul><li>Provide all tenants with a “Customize Your Unit!” checklist prior to move in </li></ul></ul></ul><ul><ul><ul><li>Refer tenant’s information directly to vendor for $80, become “middle man” for +20% service fee, or do both and make money on both ends </li></ul></ul></ul><ul><ul><ul><li>On hardware installs, easier as a flat rate. Remember, inexpensive gets it checked; you keep it </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><ul><ul><li>Tenants get security commensurate with their comfort level and you get an ever-increasing security posture at your units paid for by tenants </li></ul></ul></ul><ul><li>Annual benefit for a 4-unit = $320 referrals + $480 service = $800 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  15. 15. Related Services <ul><li>9. Getting rid of Tenant Junk </li></ul><ul><ul><li>eBay through Blackthorne Pro ( http://pages.ebay.com/sell/tools/allinone/ ) </li></ul></ul><ul><ul><li>Arrange 1-800-GOT-JUNK at 10% service fee </li></ul></ul><ul><ul><li>“ Furniture room” </li></ul></ul><ul><ul><li>“ Donation room” </li></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Buy Blackthorne and install. Provide website access for tenant. </li></ul></ul></ul><ul><ul><ul><li>Get quote from 800-Got-Junk. Add 10%. </li></ul></ul></ul><ul><ul><ul><li>Portion off separate room, storage area, shed, etc. Place signs identifying as “Donation/Furniture” room and lock. Leave release forms for tenants to sign and return on door. </li></ul></ul></ul><ul><ul><ul><li>Boys & Girls club often picks up at location for free. Salvation Army, you must deliver. </li></ul></ul></ul><ul><ul><ul><li>Leave detailed list of specific items you accept. If you don’t, you’ve created a dumpster. </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><ul><ul><li>Tenants unload during moves; you get the tax write off </li></ul></ul></ul><ul><li>Annual benefit for a 4-unit = $1,200 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  16. 16. Related Services <ul><li>10. Selling the Internet </li></ul><ul><ul><li>Wireless access can be reasonably shared across 4-8 units </li></ul></ul><ul><ul><li>Can be provided as “free” amenity or for minimal fee $15/mo </li></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>1 cable/dsl/FIOS feed, plus repeaters as necessary; cost $100 startup + $50/mo </li></ul></ul></ul><ul><ul><ul><li>4 hours total setup time </li></ul></ul></ul><ul><ul><ul><li>(Re)Sell wireless PCI cards </li></ul></ul></ul><ul><ul><ul><li>Use minimal security standards to avoid incessant system administration </li></ul></ul></ul><ul><ul><ul><li>Add to rental invoice each month </li></ul></ul></ul><ul><ul><ul><li>Develop or use an Internet Access Agreement to avoid potential liability pitfalls </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><ul><ul><li>Tenants get inexpensive Internet </li></ul></ul></ul><ul><li>Annual benefit for a 4-unit = $400 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  17. 17. Related Services <ul><li>11. Making sense…AdSense…out of online ads </li></ul><ul><ul><li>Add Google AdSense to property website, especially listings </li></ul></ul><ul><ul><li>Requires a lot of units to make any serious money </li></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Sign up for a Google AdSense account at https://www.google.com/adsense/ </li></ul></ul></ul><ul><ul><ul><li>Include code on web pages </li></ul></ul></ul><ul><ul><ul><li>Receive very small checks </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><li>Annual benefit for a 4-unit = <$10 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  18. 18. March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  19. 19. Related Services <ul><li>12. Squeeze $5 out of boxes someone else pays for </li></ul><ul><ul><li>Reduce tenant trash after move-in and unpacking by storing boxes in a specific room </li></ul></ul><ul><ul><li>Allow tenants to purchase all they can use for $5-$10 upon move out </li></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>Designate a “box closet” with a lock </li></ul></ul></ul><ul><ul><ul><li>60 days prior to lease ending, inform tenant of box closet grab for $10 </li></ul></ul></ul><ul><ul><ul><li>Alternately, assist them in purchasing new boxes (affiliate) or a moving company (affiliate) </li></ul></ul></ul><ul><ul><ul><li>http://affiliate.moveout.com/ </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><ul><ul><li>Less trash, more eco-friendly, no work on your part. </li></ul></ul></ul><ul><li>Annual benefit for a 4-unit = $40 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  20. 20. Related Services <ul><li>13. Have a lot of DVDs? Rent them out! </li></ul><ul><ul><li>Similar to Redbox, let tenants rent your DVDs from you for $1 / day </li></ul></ul><ul><ul><li>Also works for XBOX, PS2, PC games, Nintendo… </li></ul></ul><ul><li>How do I set this up? </li></ul><ul><ul><ul><li>If you live in the unit or have an office on site, keep all DVDs there. Print a list and distribute to all of the tenants. </li></ul></ul></ul><ul><ul><ul><li>Create a system for them to request, receive, and return the DVD or game. Every scenario is different. </li></ul></ul></ul><ul><li>What’s the benefit? </li></ul><ul><ul><ul><li>You get to interact with your tenants more often. </li></ul></ul></ul><ul><li>Annual benefit for a 4-unit = $40 </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  21. 21. What’s it all Worth? <ul><li>Annual benefits = $0  $4,866  $ tens of thousands </li></ul><ul><li>To avoid perception of “nickel and diming” </li></ul><ul><ul><li>“ Customize Your Unit” sheet right up front </li></ul></ul><ul><ul><li>Presentation is everything </li></ul></ul><ul><ul><li>Price to move </li></ul></ul><ul><li>Start thinking about the companies you are beating out for 1/3 of Americans’ money </li></ul><ul><ul><li>Moving Upstream – what other product lines exist before & after your sale? </li></ul></ul><ul><ul><li>Product Customization – how can you let tenants tailor their experience? </li></ul></ul><ul><ul><li>Related Services – what other things do tenants need and how can you provide them? </li></ul></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona
  22. 22. About Us <ul><li>Founded in 2005, RentingYourHome.com (operated by Cyber Applications Group LLC) is a web-based property management service targeted to the owners of the 12.3 million rental units who choose not to employ a traditional property manager. The core features of the product are its ability to easily attract and screen tenants, collect rents online, and manage maintenance at a 60%–80% savings over a traditional property manager. </li></ul><ul><li>Rent Protection Program ™ </li></ul><ul><ul><li>Automatic, recurring rent payments – on time, every time </li></ul></ul><ul><ul><li>If tenant pays by credit card, we guarantee the payment to you </li></ul></ul><ul><ul><li>No charge backs or Non-Sufficient Funds (NSF) fees </li></ul></ul><ul><ul><li>Free debt collection service – in case they run </li></ul></ul><ul><ul><li>Included with any Premium Service </li></ul></ul><ul><li>Additional +20% off for 6 months! Enter promotional code AZ32007 </li></ul><ul><li>100% Money Back Guarantee </li></ul>March 9, 2007 “ Fit the Missing Pieces” – Rental Property Conference Tucson, Arizona

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