NOI boost through cable/internet restructure

[Rich Jordan]

Figured y'all would appreciate this. 

Asset: 18-unit C-Class apartment building; Purchase Price: 500k

Following acquisition, I initially created a quite a bit of equity through the restructuring of the management, some simple expense-saving measures, incrementally bringing units to market rate, and filling excessive vacancies w/ market-rate tenants. This was all I had planned as far as adding value.

But I almost missed an easy win:

I was paying for cable TV for the entire building (amenity inherited from previous owner). This was my largest expense outside of management: $532/mo on a building grossing $8200/mo in income at the time.

In discussions with my cable provider (who also provides internet to the bldg), I realized that my tenants were paying anywhere from $55-125/mo for internet on top of the provided cable TV. I also came to find that I could get a bulk deal of premium cable and internet for $38/door.

So after running some numbers, I notified the tenants that we'd be consolidating the Cable and Internet under ownership and providing the better bundled package for $45/mo - saving my most frugal tenants $10/mo and my more frivolous tenants up to $80/mo. The change was well-received.

So now, instead of having an expense of -$532/mo, I have an income gain of +$126/mo.

This change increased my projected annual NOI by +$7,896, adding ~$105,280 in equity at a 7.5% cap rate!

On top of this, the provider is paying me $100/door upon signing the contract.