getting more revenues from existing properties without raising the rents

March 9, 2007 “Fit the Missing Pieces” – Rental Property ConferenceTucson, Arizona

Squeeze It!

Getting More Revenues from your Existing Properties Without Raising the Rents

Jeff Takle (617) 395-7723

[email protected]


Market Landscape• 34 million rental properties in U.S.

– 15 million owned by individuals who do not use a property manager• 80% of SFH owners manage themselves• 33% of MFH owners manage themselves

• Housing expenses make up 30% avg. of total personal income in U.S.—single biggest ticket item in America

• Average rents– $1,146 across the U.S.– $1,560 in Boston

• Rents are projected to rise 4%-5% over the next year• While >90% of auto loans and >83% of mortgages are paid electronically,

less than 6% of rents are. Up from 1% in 2003. • In 2006, landlords will collect $400-$600 billion in rent!

You are more successful than any other company in 1/3 of American households – tenants spend more on your “product” than anything else!


You’re more successful than…

• Uncle Sam• Ford motor company• Health insurance• Airline tickets to see loved ones

You are more successful than the iPod, Kraft macaroni, and XBOX combined!

But let’s look at how they operate…


Do they only sell iPods @ $199?songs ($1 ea)headphones ($9)accessories ($30)warranties ($20)plus Nano, Shuffle, Mega…

Move Upstream, Product customization, and

Related services, the “upsell”

The iPod


Do they only sell the Mustang GT @ $25k? Financing ($2,000) Extended warranties ($495) Maintenance in-house (+$100/visit) Luggage rack, 12-cd disc changer… ($895) Rust proofing, undercoating…($200) plus Escort, Voyager, F250…

Move Upstream, Product customization, and

Related services, the “upsell”

Ford Motor Company


Can we use this model?

Move Upstream

Product customization

Related services+

+

= Greater Revenues


Moving Upstream

1. Have a license? Get referral fees:• Relocation services• Real estate sales/rental agent• Moving companies• Moving supplies• Debt consolidation• Credit card origination• Re-branded credit card for apt complex• Free home-buying course

How do I set this up?• Affiliate marketing programs through www.LinkShare.com, Commission Junction, NSC

Reporting…• Meet and talk with people• Make phone calls• Don’t reach for too much

What’s the benefit?Annual benefit for a 4-unit = $50-$2,000


Moving Upstream

2. Seller financing and “Rent-to-own”:• Restructure rent to include option consideration

• Can place “extra” rent into escrow (▼return) or money market (▲return)

• Or, offer to partner with renters if they want help buying a new place• Hard money• Options• Referral

How do I set this up?• Ask tenants if they would be interested• Put out a few “Rent to Own” ads in addition to “For Rent”

What’s the benefit?

Annual benefit for a 4-unit = $0-$???


Moving Upstream3. Renting to military TDY personnel:

• This exists so service members can afford Holiday Inn, 30 days a month• Only works with long-term temporary duty at military bases

• Reservists activated for 6+ months service• Long military schools (War College, fellowships, nuclear power…)

• Set up lease to include various “value added” services• Rented furniture, plasma TV, kitchen upgrades, stainless appliances, washer/dryer, computer• Real estate “Option”

• Must justify charging maximum per diem rates• $60-$150 / day, or $1,800 - $4,500/mo. Wrap regular lease (at normal rates) plus added features into

new max per diem SuperLease

How do I set this up?• Contact base housing office, travel claims office, and/or commands directly. Advertise your full service

rental. Under price, say “At Per Diem Rates”• Reference “additional terms in addendum” in the lease. Put all added features into addendum. • 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.


Annual benefit for a 4-unit = $27,840


Product Customization

4. Security Deposits– What is the Surety Bond?

– Offer “Security deposit options for tenants with good credit”• No security deposit, if +$25/mo rent• Security fee $300 in lieu of deposit, acts like an insurance deductible.

– $1,000 or 12 x $100 ($1,200) being “fee” for spread out program

How do I set this up?• Determine acceptable “fee”/$1,000 based on your history• 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.• Provide this with every rental application.

What’s the benefit?• 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• You retain all rights to pursue for damages beyond deductible. NO arguments over dirty floors or

$20 light fixtures on move out.



Product Customization5. Fun with Rental Application Fees!

– Charge everyone a fee; rebate if application is approved

– Do not take a unit off market while reviewing applications – keep taking apps + fee• Provide written Tenant Screening Policy up front; first tenant who qualifies gets the unit

– Make it easy to fill out an application – they take it home, they will never return• Bring a laptop to viewing and let them submit an application right there• Give them paper copy but encourage them to fill it out online

– Free iPod (iTunes, whatever) to accepted tenant to encourage applications

How do I set this up?• Draft or obtain a Tenant Screening Policy• Create or obtain a website that takes applications (less paperwork, faster processing)

– 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!

What’s the benefit?• 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,

Annual benefit for a 4-unit = $50-$200


Product Customization6. Lease non-standard equipment to residents

– People like to customize their home. Offer a list of add-ons to their apartment.

• Computers: Take old computers, depreciate, then lease to tenants as all-in-one package

• Parking: Take open parking and turn into assign spaces. Price CHEAP.• Laundry: Buy and depreciate. Lease monthly, unlimited service, $10-$20/mo.

Subscription pricing

This is the major

pricing trend.

jump on it!How do I set this up?•Provide all tenants with a “Customize Your Unit!” checklist prior to move in•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).•Option: purchase or lease coin laundry

What’s the benefit?•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

Annual benefit for a 4-unit: Computers = $720

Parking = $240

Laundry = $480


Product Customization7. Rent additional space as “Storage Unit”

– Take large common area, extra room, backyard shed, basement, or attic, and turn it into secure storage units.

– Give one storage space with each unit “free”.

– Charge $5-$10/month for each additional space

How do I set this up?• Buy $200 in lumber and spend a Saturday building separated units• Padlocks and chicken wire are ok, but wooden doors with keys are better• Provide all tenants with a “Customize Your Unit!” checklist prior to move in• Provide boxing & storage supplies for a nominal fee

What’s the benefit?• Tenants get comfort of having secure storage, private space, flexibility to expand

Annual benefit for a 4-unit = $240-$480


Product Customization8. Enhanced alarm or security measures

– 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.

– For security monitoring systems, use referral links to make $80 per signup• https://order.ucontrol.com/?oc=bbn

How do I set this up?• Sign up for free at Commission Junction• Provide all tenants with a “Customize Your Unit!” checklist prior to move in• 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• On hardware installs, easier as a flat rate. Remember, inexpensive gets it checked; you keep it

What’s the benefit?• Tenants get security commensurate with their comfort level and you get an ever-increasing

security posture at your units paid for by tenants

Annual benefit for a 4-unit = $320 referrals + $480 service = $800


Related Services

9. Getting rid of Tenant Junk– eBay through Blackthorne Pro (http://pages.ebay.com/sell/tools/allinone/)

– Arrange 1-800-GOT-JUNK at 10% service fee

– “Furniture room”

– “Donation room”

How do I set this up?• Buy Blackthorne and install. Provide website access for tenant.• Get quote from 800-Got-Junk. Add 10%.• 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.• Boys & Girls club often picks up at location for free. Salvation Army, you must deliver. • Leave detailed list of specific items you accept. If you don’t, you’ve created a dumpster.

What’s the benefit?• Tenants unload during moves; you get the tax write off



Related Services

10. Selling the Internet– Wireless access can be reasonably shared across 4-8 units

– Can be provided as “free” amenity or for minimal fee $15/mo

How do I set this up?• 1 cable/dsl/FIOS feed, plus repeaters as necessary; cost $100 startup + $50/mo• 4 hours total setup time• (Re)Sell wireless PCI cards• Use minimal security standards to avoid incessant system administration• Add to rental invoice each month• Develop or use an Internet Access Agreement to avoid potential liability pitfalls

What’s the benefit?• Tenants get inexpensive Internet

Annual benefit for a 4-unit = $400


Related Services

11. Making sense…AdSense…out of online ads– Add Google AdSense to property website, especially listings

– Requires a lot of units to make any serious money

How do I set this up?• Sign up for a Google AdSense account at https://www.google.com/adsense/ • Include code on web pages• Receive very small checks


Annual benefit for a 4-unit = <$10


Related Services

12. Squeeze $5 out of boxes someone else pays for– Reduce tenant trash after move-in and unpacking by storing boxes in a specific room

– Allow tenants to purchase all they can use for $5-$10 upon move out

How do I set this up?• Designate a “box closet” with a lock• 60 days prior to lease ending, inform tenant of box closet grab for $10• Alternately, assist them in purchasing new boxes (affiliate) or a moving company (affiliate) • http://affiliate.moveout.com/

What’s the benefit?• Less trash, more eco-friendly, no work on your part.



Related Services

13. Have a lot of DVDs? Rent them out!– Similar to Redbox, let tenants rent your DVDs from you for $1 / day

– Also works for XBOX, PS2, PC games, Nintendo…

How do I set this up?• 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. • Create a system for them to request, receive, and return the DVD or game. Every scenario is

different.

What’s the benefit?• You get to interact with your tenants more often.



What’s it all Worth?

Annual benefits = $0 $4,866 $ tens of thousands

To avoid perception of “nickel and diming”– “Customize Your Unit” sheet right up front

– Presentation is everything

– Price to move

Start thinking about the companies you are beating out for 1/3 of Americans’ moneyMoving Upstream – what other product lines exist before & after your sale?

Product Customization – how can you let tenants tailor their experience?

Related Services – what other things do tenants need and how can you provide them?


About UsFounded 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.

Rent Protection Program™ – Automatic, recurring rent payments – on time, every time

– If tenant pays by credit card, we guarantee the payment to you

– No charge backs or Non-Sufficient Funds (NSF) fees

– Free debt collection service – in case they run

– Included with any Premium Service

• Additional +20% off for 6 months! Enter promotional code AZ32007• 100% Money Back Guarantee

getting more revenues from existing properties without raising the rents

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