A Budget Including Amenities Can Help You See and Save Green!
It’s that time of the year again: the preparation of next year’s budget for your community. Your budget is likely to cover a lot of different areas; from marketing and sales to staffing and screening. While these are necessary for the property to keep functioning, make sure to make room for amenities. Amenities can increase occupancy and drive increased revenues. It can also be used in your marketing efforts to generate leads. When budgeting for amenities, there are a few things you need to consider. If you follow these three steps, you’ll be good as gold!
The best amenity is a wanted amenity. A good way to gauge interest in a potential amenity before purchasing is to survey your community. What do they want? What amenity adds convenience for them? What’s going to make them want to renew their lease? You may think your community desperately needs a guinea pig playroom, but you better check first. An amenity collecting dust is a waste of money and isn’t generating ANY revenue.
Stemming off of the first point, when you figure out what amenity or amenities your community wants, it’s important to consider the ROI. You don’t want to commit to an amenity with a short lifecycle. You’re looking for an investment with long-term results. This can be challenging, especially when trends can come and go. Doing your due diligence through research will be vital to making sure your addition isn’t a dud. Find industry resources that can provide the data you’re looking for. Numbers don’t lie and they can be a great guide for keeping up with trends in multifamily!
Ok. You’ve listened to the community and you’re devastated about their lack of concern for the guinea pig playroom. You’ve also taken their suggestions and done some research on your own. Still hesitant about pulling the trigger on a certain amenity? Find a community that has what you’re looking for and go see it! For example, if you’ve been researching package lockers, find a community with a system. When you get there, ask to see the system, but also ask their opinion. Have the lockers made residents happier? Have they seen an ROI yet or expecting to? How do they work? Don’t hesitate to ask questions from an unbiased party before going into a sales process.
No one likes to budget. It’s time-consuming and can be difficult to stick to if problems should arise. But a proper budget can drive additional and recurring revenue if there’s room for an amenity. Then it’s just a matter of researching and selecting the amenity that will have the highest impact on ROI. Finally, go see it in action somewhere! An amenity can be just what your community needs to grow and thrive. Choose wisely and budget appropriately!
Pokémon Go Can Help Multifamily
On July 6th, 2016, an event of monumental proportions happened: Pokémon Go was released. The game has already revolutionized mobile gaming and is uniting people across all generations. Niantic Inc. developed the game through a licensing deal with Nintendo, the majority stakeholder of the franchise. The deal has proven to be fruitful; Nintendo’s market value jumped an astounding $7.5 billion since release! The game is simple: “catch” Pokémon with your phone in different areas of cities and towns. The game is a based on “geolocation,” GPS locations and landmarks, so one has to walk around to progress through the game. There are “Pokestops” and “Gyms” where people can get rewards, play against other Pokémon and find new Pokémon. So why should you care? This can be a golden marketing opportunity for multifamily communities. You can actually drive potential residents to your property with the game!
Pokémon Go is a “free to play” style game. This means that one can play for free, but upgrades are purchasable through an online store. One of those items is a “Lure Module,” which draws Pokémon to a certain location for 30 minutes. They cost about 99 cents per lure. The lures need to be set within proximity of a Pokestop (currently). Your community may already be a Pokestop or Gym; you just need to check in the game. Super geeky, right? Well, businesses have caught on and are driving traffic to them because people playing see where lures are and stop to get the free items. So how can a multifamily community benefit?
Marketing With Pokémon Go
If you could set lures or Pokestops at and around your property, you have a lead generation tool at your fingertips. In an interview with the Financial Times, Niantic C.E.O. John Hanke said that “sponsored locations” are coming to Pokémon Go. When this becomes available, why not set Pokestops around key amenities on-site? The pool, the gym, the locker system, the clubhouse, etc.; the list goes on and on! While people of all ages are playing the game, Millennials are playing the game the most (it’s a nostalgia thing). You can put the word out on social media about having a “Pokémon Tour” around the property. When the event starts, have players provide their contact information and walk them around the property to the different stops. They get Pokémon while you’re showing off key amenities and layouts to potential residents! It’s a win/win for everyone!
What about a “Pokémon Go Mixer” for current residents? Provide food and drinks while setting up Pokestops around the property. Have residents team up in groups and send them around the property to collect their goods. This will encourage meeting new neighbors and friends. Right now, you can lead residents around the area and collect Pokémon and items. Pair this with your other marketing initiatives (are you live streaming yet?) and you’ll have current and future residents hooked.
Get Ahead of the Game
In conclusion, this is a huge opportunity to show off your community and gain some new faces. Pokémon Go is still very new and Niantic is working out the bugs and creating more features. The ideas above are just a few examples of how your multifamily community can capitalize on the excitement as new content and features are released. So go out there and “Catch ‘Em All”… residents that is!
To play and learn more, download Pokémon Go from the iTunes App Store or Google Play Store.
FHA Helps Save Money
In case you missed it, the FHA has cut insurance premiums for certain multifamily mortgages. The changes took effect on April 1, 2016 and place an emphasis on energy efficiency. The change also impacts affordable and mixed-income communities with reductions for housing affordability. FHA expects the reductions to spur the rehabilitation or production of 12,000 additional apartment units every year and reduce rent and utility costs for residents. It also displays major support from the government for multifamily to get green. So what are the qualifications and details exactly? Could your project be up for a rate reduction? Here are the main details you need to know, provided by housingonline.com‘s magazine, Tax Credit Advisor:
- FHA is lowering its multifamily insurance premiums to 25 basis points a year for energy-efficient properties. That’s a reduction of 20 or 25 basis points for many existing properties, with even larger savings for new construction deals. These properties must commit to meet an industry-recognized green building standard. Owners must also keep their buildings in the top 25% of multifamily buildings nationwide for energy performance, as determined using the Environmental Protection Agency’s Portfolio Manager 100-point score.
- FHA is also lowering its annual multifamily insurance premiums to 25 basis points for “broadly affordable” housing. That includes properties where at least 90% of the units are covered by a Section 8 contract or the affordability requirements of the federal Low-Income Housing Tax Credit (LIHTC) program.
Win/Win For All!
Take note that insurance premiums won’t change for properties not meeting any of the criteria. For those that do qualify, the annual savings are substantial and owners and managers should look to see if they can take advantage of this powerful new incentive. The FHA has taken steps to help everyone in multifamily. Property owners can save money and renters have greater access to affordable rents and healthy units. Plus, going green and competitive pricing are great ways to market your community. With this initiative, everybody wins!
The Brexit May Impact U.S. Multifamily
Great Britain’s vote to leave the European Union is one of the biggest shifts in recent history. Known as the Brexit, the British economy took a dive after the 52% – 48% vote and the future remains unclear. That’s because no one has left the EU, ever! Multifamily in the U.S. could stand to gain from the vote. While analysts have differing opinions, there’s a chance the Brexit may give U.S. multifamily a boost. Here’s how:
- The Pound Has Fallen – The U.S. has one of the most lucrative multifamily markets in the world. If the pound continues to fall, British real estate may follow. Investors may turn their eyes across the pond to invest in various communities and projects. KC Sanjay, leading economist and analyst at Axiometrics, states “The (multifamily) sector accounted for 25%-30% exposure of all commercial real estate portfolios in 2015 and the first quarter of 2016 – meaning multifamily is bringing in more than its share of investment compared to other sectors.” It would make sense to switch focus and with so many diverse offerings in the industry, the U.S. could be a safe bet.
- An Extension of Low-Interest Rates – The Federal Reserve had planned on raising interest rates this year but has yet to do so. Globally, the impacts of the Brexit have yet to unfold, so there’s good reason to hold off on raising rates out of fear of recession. Greg McBride, Bankrate’s chief financial analyst predicts: “Mortgage rates will tumble following the Brexit vote, possibly hitting new record lows.” This could be big news for multifamily, especially for portfolio expansion and new development.
- A Chain Reaction – The last two points hint towards a safe and stable invest in U.S. multifamily. If the British start investing, there’s a good chance other foreign investment may follow. For example, the Middle East has a history of investing in London. If they see the British shift towards the U.S., they will more than likely follow suit. A chain reaction of foreign investment may begin, giving the industry a stimulus shot to the arm. On the flip side, the U.S. might see an opportunity to invest in British real estate if the market makes sense.
The previous points made are pure speculation and depends on global markets holding on. But the right factors are in place to make it a reality. So will the Brexit turn into the Brenter for U.S. multifamily? Only time will tell, but be ready for a potential British Invasion!