As our portfolio of multifamily assets continues to expand and mature throughout Austin and San Antonio, we’ve challenged ourselves to find ways to leverage the scale that we have. We’re looking across the portfolio for ways to save dollars on contracts, get more efficient with some of our suppliers and partners, and find ways to add value to our assets, our residents, and our teams.
We have a long laundry list of ideas that we’re working through. Smart solutions we’ve seen implemented on other assets, programs that simply require a certain amount of scale to recognize, or sometimes just crazy things we’ve dreamt up. Our challenge is to investigate each one, and figure out the feasibility of that concept for our portfolio or asset—and then try and implement it. Many of these ideas won’t ever get implemented, but the very best ones will wind up making big differences where they work.
In today’s article, we want to highlight a program that did make it all the way to implementation, and something that we’re now planning to roll out on every asset that we can.
I’m sure you’ve heard of it, and we certainly didn’t invent it. But we do think we’ve come across a very smart way to add true value to our residents and our bottom line.
Overall, we believe that strong internet is one of the most important and desired things in the world today. Everyone—and we really do mean everyone– has the need to be online, and wants to be able to connect from anywhere. That’s true of you and me, and it’s certainly true for our residents. The COVID-fueled work from home movement has only exacerbated this.
For a couple of years, we’ve been looking into options to provide better and cheaper internet for our residents. After reviewing all our contracts and internet infrastructure, we identified one asset to try this out on, and subsequently built and installed our own WIFI infrastructure across the property—providing strong WIFI for every one of our residents. It’s been a huge success so far with strong adoption, and we’re planning to roll this out everywhere we can.
Typically in the apartment world—or perhaps we should say historically—the big cable companies come to apartment owners and offer them their services for cable and internet across the property. The property signs a contract with the company, gets some sort of big fee paid to them upfront, and then as residents move in the onsite management team refers them to said company to select their preferred package and grab all the routers and boxes needed to get operational. There are a ton of variations in the contracts, the services they provide, etc, but this is how it’s been done for a long time. And the contracts they sign are typically long-term and nearly impossible to get out of.
In theory, these contracts make sense for residents and owners. At least they used to. Today, it seems like they only make sense for the cable companies trying to lock in some longer-term revenue streams. Many residents don’t want the cable package, opting for just internet. Or they have a preference towards a different TV provider from the one offered onsite. Nearly every asset we’ve bought has had a contract in place—and time and again we’ve seen our residents frustrated with the lack of options or choices they’re forced into.
Again, we firmly believe that everyone needs internet. And no one has a brand preference about their internet provider the same way they might have about their cable package. In fact, most of our renters would prefer not to be required to have cable at all as they stream their content. What everyone wants is high-download speeds and low prices. And if they could have that all set up without needing their own equipment and it just worked when they walked in the door? Even better.
Cue the music for our test asset with our own WiFi system.
At this asset, the long-term bulk internet contract was coming due, providing the chance to invest in our wired infrastructure and create a property-wide WiFi network. Now at move-in, residents are signed up and into our network so it works everywhere they go. They don’t need any equipment and can connect in their unit, at the pool, in the clubhouse, or sitting out under a tree. They pay the property a monthly fee for very high-speed internet, and it saves them money—as the fee is far lower than a comparable speed plan from a carrier.
We call that the definition of a win-win. We’re providing a better service and experience to them, they are paying less than they otherwise would, and we’ve created a new revenue stream for the asset that increases its value. We know it’s been a success onsite, as we have current residents coming in to sign up for it and ditch their current provider—long before their lease renews—when they typically would be eligible for the program.
Along the way, we have learned a whole lot. First, we don’t own the current wired infrastructure onsite—the cable companies do—a rather large detail in that pesky little contract. So you can’t just flip a switch and change providers. When we made the decision to roll this out, we had to install our own wires. Miles and miles of them, retrofit to the property, calculating how many hot spots would be needed to adequately provide fast coverage for each building and unit. This requires a lot of trenching and a lot of communication with residents—some of whom we need to get into their unit to add components.
It’s an expensive undertaking, and its time consuming. In our case, it cost over $200,000 to install the cables, and took months to complete while we waited on permits and City inspections. With a capital investment like that it’s obviously a big decision, but we had the dollars available in our Value-Add capex budget.
The additional revenue stream we’ve created is great. We think it conservatively adds over $1,000,000 of value to the asset.
But what we’re really excited about it is the impact and improvement it has had onsite for residents. The feedback has been phenomenal, the adoption has beaten expectations and we’re providing exactly what people want—easy and high-speed internet. Nothing else—no TV bundles or equipment required. It’s a huge tool to use in marketing for our leasing team as well, something to stand apart from the competition.
One last benefit—we now have a network we control. As more and more smart home products and systems hit the market, we have the ability to add those products to our units. Of course, each one of those is added to our list of ideas to check out and will need vetting—but we’ve future-proofed the asset should we decide something makes sense in the future.
Who could have guessed that WiFi would be a differentiated product? Not us. But this system is. And we’re planning to roll it out across our portfolio—just as soon as those pesky contracts start to expire.