Viewpoints
By: Bryan J. Rader, President, Pavlov Media
One of the best capital-improvement plans a real estate investor can consider is upgrading a property’s infrastructure to support today’s internet user.
One of the best ways to be successful in the multi-family technology space has always been to learn the business from the property owner’s point of view. I saw this early in my career when I was first starting out. I saw how important it is to align your thought-process with an apartment owner or investor’s mindset.
Have you ever been on a due diligence trip where the asset management team previews every aspect of the potentially acquired multi-dwelling unit (MDU) community? What about a unit-by-unit inspection to determine the quality of the appliances or the flooring in each apartment?
A real estate investor’s assessment of a multifamily deal includes looking at comparable properties in the local market, evaluating the school district, crime statistics in the neighborhood, and employers based in the area.
I’ve observed property owners try to determine what they could do to elevate rents by modifying the finishes in each floor plan type or adding new amenities. For older communities, this might include knocking out a wall to open up the kitchen, adding new lighting, or replacing the outdated cabinets.
And, to attract the right customer, they might evaluate their asset’s curb appeal, the clubhouse, and certainly the amenities. On-site staff might tell them, “Nobody’s using the tennis courts anymore,” or “our residents need a path to safely walk their dogs.”
When I was working for a property management firm a long time ago, I took one of the Institute of Real Estate Management’s certified property management weeklong courses. It was very eye-opening.
The professor talked about how to evaluate investing capital in existing property upgrades and turnarounds.
The question always came back to, “how much money are you going to spend to rehab the apartment community? Where can the property owner get their biggest bang for the buck?”
The first objective was to assess the existing strengths of the community: for instance, traits like having a large floor plan, having lots of parking, a big clubhouse, or being close to schools. The second step was to identify the property’s weaknesses – maybe it lacks a playground, or busy streets go throughout the property, or maybe it is missing a fitness center for the parents.
This can form the basis for developing an excellent capital improvement plan that involves projects like creating a large and secure play area, adding speed bumps to the roadways, or converting part of a large clubhouse to a modern fitness center. All of these improvements will drive prospect traffic, occupancy and rental rates, and ultimately real estate value.
This brings me to bulk managed Wi-Fi. Yes, I know. Every conversation leads me to this topic!
Many of the apartment communities built during the past couple of boom cycles do not have adequate wiring to support the current renter’s usage, which includes activities like gaming, streaming working from home, or the use of mobile devices. Fixing this should be a priority for a real estate investor.
The best message I heard in my CPM course was to pick the most efficient use of capital and build the ROI analysis around those options. What better way than to enhance the quality of resident connectivity with the addition of managed Wi-FI?
We all know the ROI on this investment.
I sit in a lot of meetings with real estate owners and investors who have to make these types of capital allocation decisions every year. They want to create the best living environment for their customer, while maximizing the value of their investment.
You don’t need to take the CPM course to know the value of this popular amenity and resident service. It almost always makes sense that managed WI-Fi is a part of the capital improvement planning discussions.
Best wishes for an amazing 2024 to you and your families.
