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When and How Much Should My Community Charge for Parking

When and How Much Should My Community Charge for Parking
"How much to charge for a parking space" is a common concern we hear on a frequent basis. A lot of communities, specifically in the multifamily industry, struggle with knowing how much and when to charge for parking due to the concern of negative response or backlash from residents. It is an unfortunate reality, that offering free parking at a community such as an apartment complex or shared condo parking lot can lead to numerous issues and even place a higher long-term cost on the local community itself. Overcrowded lots result in unhappy residents that spend additional time searching for parking; which is just one issue that can arise when there is no cost tied to parking a vehicle onsite. Parking Lot Supply and Demand Considering if a multifamily community or apartment complex has fewer spaces than it has units or is above the average of 1.88 vehicles owned per household (according to the U.S. Department of Transportation), the demand outweighs the supply causing a parking deficit. This results in parking problems such as residents wanting to park their vehicle close to their own home only to find out the space has been taken by a neighbor's guest who has been occupying the space for far too long. This can be managed effectively by pricing out permits based on the deficit. Every city has building codes which allocate a specific number of parking spaces per unit, however depending on the data that was used at the time of construction, this may......
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33 Ways to Generate More Property Income Beyond Fees

33 Ways to Generate More Property Income Beyond Fees
Last month, Multifamily Insiders published the latest edition of their study on the most common Ancillary Income types for apartment communities. (You can read the full report here.) I'll give you the top five types: Application Fees Late Fee Pet Rent Early Termination Month to Month Fee And here are a few more personal favorites: Lapse in Renters Insurance Fee Redecoration Fees Resident Discount Program (This seems counter-intuitive unless we're at CostCo.) Marketing Coordination Fee (to pay for social media at the property) Eviction Holdoff Fee (You can't pay, so we're going to charge you not to kick you out.) "We also have community gardens which we charge for" Does anyone else feel nickel and dimed? (There's a reason cable companies and airlines are among the most despised industries.) Please don't misunderstand this as a lack of empathy for the property owner and manager. I have zero issue with value-add services or fees that cover legitimate business expenses. There's a hard cost to process applications and run background and criminal checks. It makes total sense to apply a penalty to encourage on-time payments. Pets cause damage. But we want to charge customers more because we run an Instagram account? Or for the opportunity to plant a garden? I can't imagine too many customers feeling great about giving up their hard-earned dollars for fees like this. What's better than fees? Value worth paying for. It's not like we have to give everything away for free. There are better ways to generate ancillary......
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What are the Top 10 Most Commonly Collected Types of Ancillary Income?

What are the Top 10 Most Commonly Collected Types of Ancillary Income?

Over the past few months, we developed a research study on apartment community use of Ancillary Income, and to start off, we wanted to develop a comprehensive list of the most common types of income in this vein.  In total, we amassed a list of dozens of types of income, although please feel free to add your own in the comments so we can improve this research in the future!  You can download the entire list of ancillary income types, as well as see how much communities are charging for application fees, admin fees, pet rent, and a variety of other charges and fees. 

Here are the 10 most commonly collected forms of ancillary income:  (Percentage shows percent of responders who collected that type of income)

Application Fees

92.09%

Late Fee

87.05%

Pet Rent

82.73%

Early Termination

71.94%

Month to Month Fee

67.63%

Water

58.99%

Parking/Garage Fees

54.68%

Admin Fees

53.96%

Trash

53.24%

Washer/Dryer

42.45%

 

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An inside look at laundry revenue (commissions)

Greetings Gentle Readers! Today's topic is one that is of some concern to multifamily apartment owners currently in a laundry lease or thinking about signing a laundry lease. "Commissions" is a colloquial term used by laundry vendors and property owners alike but in reality "commissions" are legally "RENT" for the space the machines occupy. Typically the property will receive a percentage of the gross revenue (collections) that the machines generate from usage by the residents on the property and in some cases off property usage. How that percentage is computed can be confusing.  There are 3 very broad categories of RENT payments that are computed and made typically monthly. First let's look at what some variables the laundry vendor will input to calculate any type of RENT payment. Capital investment (buying the machines and providing technology payment systems if suitable)  Operating expenses (installing, servicing, collection, processing, insurance, vent cleaning, etc., etc) Term of the lease (Typically, 5, 7 or 10 years) Contingency Risk (Occupancy, market risks, competition from in unit hook up) Revenue (collections) from historical performance over the past 12 - 18 months Condition of the property (new construction or existing) Class of Property (A, B, C, D) In unit connections Vend prices Competing laundromats in the area # of Machines Vandalism risks Type of Machines (front load or top load) Quality of Machines (Factory New or from Inventory)   Once those variables are collected and input the commission or RENT payments can be determined by the laundry vendor's software program. ​And, as I......
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Parking still a necessity of foreseeable future, even with self-driving cars

Many people who live in cities are electing to forego car ownership these days. But city dwellers aren’t hitting the brakes on vehicle custody so hard that it will render parking lots obsolete in the foreseeable future, despite claims to the contrary. With the increase in utilization of ride-sharing services like Uber and Lyft and advanced technology ushering in the era of self-driving cars, some apartment developers in the U.S. have been preparing to revamp parking structures into other uses for when car ownership becomes sparse and parking places expendable. Whether it’s a private, shared or self-driving vehicle, it won’t be on the road 100 percent of the time, and parking will still be a necessity.  The International Energy Agency forecasted the number of cars on the roads worldwide would reach 1.7 billion by 2035 – which is doubled from 2012. But a recent LA Times article contends the magnitude at which people are renouncing car ownership is leading to extraneous parking lots that will soon be repurposed. Based on the increasing overall car ownership numbers, can things actually get to the point that parking garages are so unutilized they can be rehabilitated to serve as shops, gyms and movie theaters instead? Yes, some new apartment developments have reduced their parking space to as low as 0.6 spaces per unit in urban areas, but a further decrease doesn’t appear imminent for the foreseeable future. It’s true the world is amidst a transportation revolution. But cars aren’t going away altogether. Why should parking facil......
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What are the Top Sources of Ancillary Income?

Ancillary income for multifamily properties is always a hot topic, both for punitive fee-based charges, as well as service upgrades, and was a compelling session topic at the 2017 National Apartment Association Education Conference and Expo.  According to Chase Harrington, COO of Entrata, ancillary income averages 4.4% of scheduled monthly charges, and he shared their research on the top 20 sources of ancillary income: Additionally, the panelists at the session, Gunti Weissenberger of Westover Companies, Kellie Hughes of Mill Creek, and Robert Speck of Bonaventure, shared their top 10 sources of ancillary income: Westover Companies Mill Creek (Modera Brand) Mill Creek (Alister Brand) Bonaventure Utilities Garage Early Termination Fees Late Fee Income Early Termination Fees Parking Parking Garage Income Laundry Early Termination Fees Laundry Income Bldg Facility (Renters Insurance) Month to Month Fee Amenity Fee Late Fee Pet  Rent Pet Income Storage Pet Premium Month to Month Premium Water Application Fee Administration Fee Laundry Income Billing Fee Pet Premium Application Fee Valet Trash Cable Internet Initial Pet Fee Initial Pet Fee Application Fees Late Fee Administration Fee Misc Income Pet Move-In Fee Short Term Premium Late Fee Storage Parking Income   The session also shared some data from NAA on actual ancillary income averages in some top metro areas:   The panelists also shared some insightful comments about specific ancillary income options: RUBS - Gunti Weissenberger indicated that they don't prefer using RUBS as their residents don't like the way utilities are broken out.  He mentioned that when they switch to......
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The Sharing Economy is Thriving: Just Look at WeWork

The Sharing Economy is Thriving: Just Look at WeWork
  The sharing economy is so much more than Airbnb. The sharing economy continues to progress on a daily basis and shows no sign of dissipating any time soon. The recent success of WeWork is ample proof of that. New York-based WeWork, which provides shared workspaces, recently received a $300 million investment from Japanese telecommunications company SoftBank, which catapults the company’s value to more than $17 billion. Not too shabby for a sharing-economy business founded seven short years ago. Perhaps it’s more of a surprise that the post-millennium concept took so long to be discovered in the first place. Rooted in convenience and cost-savings for consumers, and ancillary income opportunities for businesses, the sharing economy is the perfect blend of modernism and common sense. Airbnb was the first of this breed to truly take hold on a global scale, facilitating part-time rentals for houses, apartments and other living spaces. This essentially bypasses the need for hotels for many consumers while providing a more intimate experience at their destination. Since Airbnb was founded in San Francisco in 2008, numerous other examples of sharing economy have sprouted up, particularly in recent years. Most metropolitan areas now offer a bicycle-sharing service, in which individuals can rent a bike on a short-term basis at Point A and return it at Point B. RelayRides facilitates the use of neighbors’ cars, enabling individuals to rent cars by the day or the even by the hour. DogVacay serves as an alternative to the kennel, allowing dog owners to utili......
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Google Maps’ New Parking Feature Underscores Demand in Urban Core

Even Google understands how frustrating parking can be in urban markets. By now, nearly everyone has utilized the Google Maps features that shows how congested the highways and side streets are on a particular route, and offers the most expedient routes given the real-time traffic. Now Google Maps is taking it a step further with a similar feature for parking. According to a recent article in TechCrunch, Google is using historical parking data to calculate a parking difficulty score, which will be presented in the app’s direction card as “Limited,” “Medium,” or “Easy.” This feature was first spotted in January when users of Google Maps’ beta on Android had access to the addition. The benefits to commuters are clear, as now they can mentally prepare themselves not only for the forthcoming drive, but also the parking situation when they arrive. For apartment communities in those urban cores that possess a fair amount of extra parking space, the ancillary revenue opportunities are tremendous. Apartment communities in those congested markets can transform their empty spaces into cheaper and more efficient parking options for the local businesses and their employees and visitors. To be clear, the Google Maps parking feature is still a work in progress. It relies on historical data (such as: this area is usually popular in November) rather than the real-time data, but its anticipated that the feature will quickly gain traction and improve as time passes. For now, Google is launching the feature in the top 25 metros of the U.S., which is ......
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What is the Value of a Departing Resident?

This is meant to be a conversational blog post, so please chime in with your thoughts in the comments below! When a resident decides to turn in their notice to vacate, does that mean they suddenly don’t have any value to their community?  For most communities, once they receive that NTV, that resident isn’t really a primary concern anymore, as they fall through the cracks between the status of a prospect who needs to be sold, and a resident who needs to be retained.  But even though they are moving out, they are still a dedicated audience, and my question to you is this:  Are you getting any residual value from that relationship? I met someone about two weeks ago who worked in the home buying sector, where his company helped home buyers get a discounted rate for their real estate agent.  Although we are not in the exact same space, our industries deal with the same clients, just at different points in their timelines.  Oftentimes, our residents become their prospects, so the question came up about whether multifamily properties, who had received a notice to vacate, could actually be a referral source.  For many of us, the idea doesn’t sound quite right – it’s like breaking up with someone and then introducing your ex to a future boyfriend/girlfriend.  Although we would like to feel we are all mature adults, the idea doesn’t necessarily sit well.  But if we could get away from that feeling and look at things in a completely ......
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Apartment Leases Resemble Commercial Leases?

A major factor contributing to the improved health of apartments is many apartment leases are becoming more like triple net commercial leases. Many if not all “utility” costs as well as well as governmental and quasi-governmental costs are being passed through to residents, however,  owners cannot pass on increases in property taxes, insurance, maintenance or standard on-site administrative costs in excess of a base year to residents. Somewhat surprisingly, residents haven’t balked en masse at the increases in charges, perhaps because many are former homeowners who are accustomed to paying them. As pointed out in the Winter 2012 issue of Texas Apartments by Wendy Wilson, the Texas Apartment Association General Counsel, developing lease provisions to meet the realities of the marketplace while conforming to the intricacies of the law is a top priority.  She has developed a new lease addendum allowing apartment owners to allocate a variety of governmental charges and fees to residents, such as “street repair/maintenance, emergency services, conservation districts, inspection and registration/licensing”. Owners and operators who also charge for services more akin to utilities such as central cable and satellite TV, stormwater/drainage, and trash pick-up/recycling fees, can include all such charges in one addendum. In some states, amortized capital improvements for stormwater/sewer facilities and school district expenditures, are also being passed through to residents regardless of whether such charges appear on utility bills or property tax bills. Ms. Wilson points to a variety of formulas for allocating such costs. No doubt, there is and will continue to be......
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