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Gigabit Fiber For Apartment Complexes -- An Easy 8% Increase In Rental Income Is Just The Beginning.

Gigabit Fiber For Apartment Complexes -- An Easy 8% Increase In Rental Income Is Just The Beginning.

“Gigabit Fiber” or “Fiber to the Unit” (FTTU) is now an easy, affordable and revenue-generating way to provide Internet access to most apartment complexes. When the service is done right, the benefits include profits, resident attraction, brand recognition, loyalty, retention, and new marketing capabilities. Often missed are the cost savings found in the overall construction outlays; redacting the antiquated wiring expenses from the buildout are now possible. Properties can go ALL FIBER for their telecommunications needs. Additionally, Gigabit Fiber creates an infrastructure which is “future ready” and allows for a whole new realm of ancillary add-ons.  This concept is often thought of as the Internet of Things (IoT). Allowing apartments to bridge the gap between a temporary living environment and the long term comforts of a futuristic home intrinsically can shift the residents overall satisfaction.

Millennial and remote work populations are on the rise; just the mere mention that your apartment has fiber is enough to have residents and prospective residents clamoring.

Why Gigabit Fiber?

If you are the end user (resident) this question is rather easy to answer. You want the fastest, most reliable speeds available.  Fiber provides this. Further, you are sick and tired of antiquated DSL and cable Internet options. If you are an apartment owner it boils down to 4 things:

1) Profits (Recurring and Intrinsic)

Fiber and other high-end Internet services like Fiber Backed WiFi,offer the real possibility of monthly recurring profits that can be entered into your balance sheet as “Internet Income.” Selling quality Internet services to your residents who are already using (and paying someone else for) these services, is a simple idea, made possible when you install and own the fiber optic network for your property.

Intrinsically, there are a host of ways an apartment owner can realize profits when offering fiber services. A “Fiber to the Home Council Study” shows that apartments see an 8% increase in rental incomewhen providing competitive broadband options, such as fiber, to your residents.“Another study found that gigabit fiber connections can push rent profits even higher, up to 11%”. It’s also likely that increased occupancy from attraction, appeal, satisfaction, loyalty, and retention will increase your bottom line year after year for the foreseeable future. 

In the old days, reselling Internet through the property was a bit tricky and didn’t make sense in most cases. Just 10 years ago, you could say that a large minority of residents didn’t use the Internet in a way that was meaningful to their lifestyle. Perhaps even more insurmountable was the idea of selling or offering low quality “Big Box” bulk Internet to your residents.  Many savvy apartment owners could sense this was a bad financial and brand decision, so the idea never really took off, and for good reason.  Bad services to your residents are always a bad idea.

Thankfully, times have changed.  Now, virtually everyone uses the Internet, and with advances in technology today, it’s never been easier to side-step the Big Box Internet guys. Providing your own premium Internet amenity is now simple, cost effective and extremely lucrative.  How to set up a Multi-family Internet system that works may be your next question. There are a few ways to do this, however, doing it right is imperative; otherwise, you are right back where you started… bad services and a tarnished brand.

2)  Savings (Construction & Turnover Costs)

This goes for new builds and most retrofits -- fiber can save hundreds of thousands of dollars on infrastructure costs. Savvy developers are foregoing multiple wiring schemes. YES, they are cutting out ALL the antiquated wiring like coaxial (RG 6) and phone lines (RJ-11) from their construction design. Bringing several strands of spaghetti-thin fiber to each unit can provide all the telecommunication needs the apartment will have and then some.

Since fiber has an extremely small form factor and has the capability of being modular and scalable, there are other considerations to look at from a cost savings perspective. First, how does an apartment owner keep up with all the future bandwidth needs and costs of improvements for his property? What will she do when all the TV content is being streamed over the Internet? Will “3D-TV” and “Virtual Reality TV” become main-stream? Will coaxial and copper lines be advanced enough to provide the required data distribution or will each unit need larger pipes of bandwidth, like 10 Gigabit fiber, in the near future? By deploying a modular Microduct conduit system with a strand or two of fiber to each unit, the residents will have plenty of “pipe” for decades, if demand increases or changes then the infrastructure can upgraded by pushing additional fiber through the conduit. Ultimately, a single fiber strand can theoretically handle 80, full 10 Gbps connections. The chances of a residential connection maxing out a single strand of fiber anytime soon are unlikely. 

Perhaps more importantly, an infrastructure that takes into account a modular system can effectively realize huge cost savings when required repairs and maintenance are needed. Overall, the construction savings and future upgrade costs alone can pay for a Gigabit Fiber install several times over.

Additionally, many apartment owners have significant turnover costs allocated in their budgets.

            “Each vacant unit could cost an owner anywhere from $1,500 to over $5,000 per month when you factor in make-ready costs, advertising, and incentives to get the unit leased,” says John Rials, managing director of real estate for Charleston, S.C.–based Greystar. 

Suppose an apartment owner has a turnover cost of $1,500 per unit.  The cost to install Fiber to the Unit is around $1,000 per doorwhich means that one new resident or one retained resident per unit pays for the cost of the system. Investing in Gigabit Fiber can transform your brand overnight, generating more profits and creating happy residents.

Turnover costs are a big deal.  Many owners are willing to provide lofty rent concessions to attract new residents or keep existing ones. Consider the cost of offering 12 months of Gigabit Fiber Internet services versus the normal one month free rent concession often marketed by apartment owners.  An owners cost for the amenity can be as low as $35 a month (and as low as $18 for lower speeds) for a bulk gigabit fiber Internet service.

Most residents’ perceived value of Gigabit Fiber is well over $100 a month which can make the offering feel quite substantial. If the average rent were say $1,200 a month, then the property would save over $700 annually for that unit by implementing 12 months free Gigabit Fiber versus one month’s free rent. Said another way, the property just increased the total profit on that unit by nearly $60 per month. Projects with small yields may want to take particular notice to this and run the numbers to see just what adding Gigabit Fiber can do for them. 

3) Attraction and Marketing (Branding)

The words “Gigabit Fiber” have a certain sexiness and attraction to them. Millennials and remote workers know that these tiny little words offer a whole new world of possibilities. Many of us are familiar with Google Fiber.  Although Google no longer plans to pursue fiber build outs; they originally accessed the demand for fiber services spot-on… Americans demand fiber. Also, although Google had a cost-prohibitive approach, the fact still remains that when you advertise Gigabit Fiber or Fiber to the Unit (FTTU) people listen. Moreover, apartment owners are in a unique position because they have the power of “synergy” and they can integrate into the existing fiber grid, which reduces total cost of ownership significantly.

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High-speed Internet is the #1 apartment feature demanded in the multi-family industry.This means having the very best in Internet  services, like Gigabit Fiber, will attract even more new residents. Successfully providing the coveted “word of mouth” marketing that every business craves and understands as being integral to their growth can be as easy as offering Gigabit Fiber. Additionally, owning the infrastructure, rather than allowing third-party Internet Service Providers (ISP’s), is the only way to have full control of ROI and profits. Look for a Full Service Internet Provider (FSIP) who will design, install and manage your Internet system so that you can enjoy both the profits and a cutting edge, hassle-free operation. 

4) Demand (Setting Yourself Apart)

Setting yourself apart with Gigabit Fiber would be fairly easy since most apartments don’t have these services yet. That will change in short order, but for the time being, this means early adopters will feel a windfall of attraction when they add the service.

Renovating your units by adding cosmetic and amenity upgrades are done all the time.  While these upgrades are proven to help revitalize the bottom line, in most cases they usually don’t separate you from your competition. They are more commonly done out of necessity, to bring a property up-to-speed, and level the playing field with newer properties being built in an area. Savvy investors understand how to create synergy while also introducing separation in the market place. Making necessary improvements to your  property, as well as adding Gigabit Fiber,  can create a multiplier effect (like gasoline on fire)  adding tremendous value to the property and thus higher rent amounts. Are you having trouble justifying new rent amounts after renovations?  A little gasoline should do the trick!  

So What is Gigabit Fiber?

Most fiber has the potential to provide theoretical speeds well beyond 1 gigabit. What is meant by Gigabit Fiber is simply that you have at least 1 strand of fiber to the end-user unit/apartment/home and that fiber is connected to the fiber grid giving the individual the ability to connect directly to the net uninhibited and without antiquated wiring bottlenecks.  This allows for data transfer speeds of 1000 Megabits per second and beyond, which is up to 50 times faster than the average speed in the U.S.  

How to Connect Your Property to the Fiber Grid?

Most apartment buildings in America are relatively close to the fiber grid. It’s actually disturbing to see how many businesses, homes and Multi-Dwelling Units (MDU’s) are passed by in most cities across America. Integration can be cost prohibitive on an individual account basis, but when you look at it from a bulk scenario, it is financially attractive with excellent Cash on Cash Returns (COC).  Further, by tapping into the existing fiber grid you only have to worry about your properties wiring, thus making the endeavor much more affordable. 

Integrating fiber to the property is the first step in providing Gigabit Fiber Speeds to your residents. Connecting to the fiber grid may sound daunting, but when you hire an FSIP to design, install and manage the network, it is all part of the service. The build out cost to connect the fiber to the property can be absorbed quickly when you purchase bulk internet services and bake them into the rent or into the resident’s technology fees. 

Once the property has the fiber hand-off, it is then connected the outside plant (OSP and, through a series of conduits, the fiber is connected to each building. From each building the fiber is then routed to the units. This can look a number of ways depending on the construction material, layout and existing conduit infrastructure.  At the end of all this fiber, the last connection is commonly a Wireless Access Point. This allows the residents to connect wirelessly throughout their network. Advantageously, a property can easily overlay a Fiber Backed Property-Wide WiFi solution from this Gigabit Fiber wiring if they choose.

Installing Gigabit Fiber for an apartment complex is easier than most people think especially when using a niche-focused FSIP to do all the heavy lifting.  This holds true even in a retrofit environment. The resident demand for these services is definitely here. Increasing your properties bottom line, saving on construction costs, capitalizing on the attraction and marketing benefits while setting your property apart are just some of the ways fiber can transform your property. The upstream fiber networks are readily available and accessible in most cities already; the key is integrating into the fiber grid so you can start taking advantage of the many benefits, namely, new-found profits.  When your residents can start taking advantage of the best Internet in town with Gigabit Fiber Speeds and save a little money, they will quickly fall in love with the service and their new home. “Profits” and “Happy  Residents” --   now that is fiberlicious! 

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This comment was minimized by the moderator on the site

That's some fuzzy math right here :))) You wrote that each unoccupied apartment costs $1,500-$5,000/mo to the landlord. Considering that median rent for a 2-bedroom apartment in United States is $1,200/mo, landlords must be such great people for...

That's some fuzzy math right here :))) You wrote that each unoccupied apartment costs $1,500-$5,000/mo to the landlord. Considering that median rent for a 2-bedroom apartment in United States is $1,200/mo, landlords must be such great people for working at a loss. Lol.

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  Viacheslav Eremenko
This comment was minimized by the moderator on the site

I don't quite understand... The $1,500 is turnover cost, which includes vacancy cost, cleaning, painting, etc.

  Brent Williams

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