Apartment Budgeting: Parking Income

Parking income is a way to add additional revenue and thus additional value to the bottom line.

Income for your parking spaces is key to adding valueWanted to pause a second to say thanks for all the feedback on the budgeting series – we (meaning you and me) seem to have a good thing going here.

We continue this week with the next line item in our apartment budget: Parking Income.

Parking Income Defined

Parking is an interesting subject. Interesting in the sense that one could posit that it should come included in the rent. While the other camp would suggest that it is an ancillary income and thus should be accounted for on a separate line item.

To define it simply – it is income derived from renting the right to use space in your parking lot or parking garage. That space could be reserved for exclusive use or the right to at very least have access to a space.

Budgeting Strategy

If you have a stabilized operation this is pretty simple. Look back at your twelve months of trailing history, consider rate increases and straight line it. Or, ebb and flow it with occupancy.

If you are in lease up – the work is a little more difficult and starts with a full market survey. Not unlike we do competitive surveys for assistance in pricing apartments – we do this to get a sense for pricing parking spaces. Now – no matter if you have a surface lot or a garage, I think it important to understand the pricing for both. And, I think it important to get a sense for what the barriers are.

I define barriers as the 3 block, 5 block and 10 block radius. I also lump in nearby walkable attractions be it football or baseball stadiums, museums or vibrant cityscapes. It all matters in your pricing and budgeting strategy. It really boils down to proximity with a bit of supply and demand layered over the top.

Once you have your market survey complete – you have to consider how quickly the spaces will get absorbed. If you have a plethora of spaces this is not an issue. But, if you have a dearth this is a big deal. You don’t want to sell out too soon. Neither do you want to get to the end and have left over inventory albeit I would prefer this to selling out to soon.

The key is paying close attention to what the market is telling you, be nimble and don’t be afraid to increase rates along the way.

Why Don’t We Include Parking in the Rent

I have asked this question no less than a dozen times and still to this day don’t know that I have a clear reason.

The top two reasons that I can recall off the top of my head are, 1. Tracking 2. Financing/valuation.

Would love to hear your feedback on the subject – until then…

Your apartment budgeting multifamily maniac,

M

 

 

 

Apartment Budgeting: Laundry Income

Laundry Income can otherwise be termed as revenue share.

To continue with our Apartment Budgeting conversations; this week we are penning on the subject of Laundry Income.Apartment Budgets Laundry Income

Laundry Income Defined

Laundry Income can otherwise be termed as revenue share. This comes in the form of upfront concessions given at the time of contract signing. Or, in the way of refurbishment of your laundry facility. In addition to the aforementioned, one can negotiate a long-term share of washer and dryer collections. The payments can be set to arrive monthly or quarterly.

There are an endless number of ways that these contracts can be negotiated ranging from the vendor coming out-of-pocket to completely update your laundry facility to paying for a small share. In lieu of that, you can negotiate for a larger share of the ongoing revenue and forego the upfront incentives. You really have to consider this on a case by case basis. And, if you don’t know which way is best – reach out and ask.

Laundry Income Budgeting Strategy

If you are setting up anew – request a collection analysis from your vendor of choice. Ask them to pull trailing data from a comp that is similar in size and demographic. Consider drivers that could cause differences in your property versus another. Drivers such as; in unit washers and dryer connections, in unit washers and dryers present in select units, usability of room (is it centralized or located in the basements of each building), number of machines in the room, etc.. All things should be considered to give you a fair idea of what to budget.

If you are set and forecasting the new year – consider your most recent twelve to eighteen months trailing. Consider any foreseeable causes for disruption to up or downside. And, consider your timing. Plug the numbers accordingly.

Laundry Income Marketing Strategy

Not to over stress the marketing is everything mantra but it really is and producing Laundry Income is no different. Make sure you rooms are dialed in multiple times throughout the day. Make sure that the floors are swept and mopped. Make sure the folding tables are clean and free of clutter. Make sure the trash cans are emptied regularly. Make sure the machines are clean to include the lent traps. And, make sure the lighting is 100% working 100% of the time.

And, by all means – hand out free tokens or swipe cards from time to time. Host a – do your laundry for free – happy hour every Wednesday night. Call is Duds and Suds – they bring the duds you supply the suds. Make it social. Have T-shirt folding races. Have the neatest fitted sheet folding contest. Blow it all out on Facebook. Share the love of duds and suds. Above all – give people are reason to love the laundry room so that they come back and spend money using your machines.

Your lovin’ laundry income multifamily maniac,

M

Prop pics: Apartment Therapy

Apartment Budgeting – Application Fees

There are a generous number of other income items you can account for in an apartment budget. Other income also known as ancillary income is an opportunity to add value in the way of services that are above and beyond rent monies. From application fees to cable income to utility recovery, the chances to collect additional revenues are plentiful.

Application Fees

Application fees are typically charged per applicant and or one fee per married couple. More times than not it is determined by comparing and contrasting rates charged by comps in your respective markets. In my experience, I have seen these rates range from $30 to $50 per application. The fee is collected to offset the cost of doing credit and criminal background checks. And, it is collected at the time the application is submitted for processing. The fee is typically non-refundable but is sometimes waived if the application is approved with no conditions. In the latter case, it is considered a marketing cost and or a cost of doing business.

Analysis of Application Fees

You can discern some down and dirty information using the application fee amount in a given month. You can take the total application fees collected in a given month and divide it by the amount charged for an application and compare that number to the number of leases taken and or number of move ins for the month. It’s a back of the napkin way of making sure you have collected a fee for every lease or every move in. Any margin of error should show up in a concession or other concession line item.

Application Fees – Money Orders

There is a downside to collecting application fees. Over the years, I have seen it more times than I would like to admit. On-site team members take blank money orders, fill them out in their own names and cash them. They attempt to get away with it by writing the amount off to a concession or other concession. Just something to be aware of.

Your – always looking for ways to maximize value – multifamily maniac,

M