Amenities Add Value
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Owners and managers of large apartment communities are adding amenities to apartment living like never before. Their goal is to offer residents a quality of life package designed to be more appealing to a broad spectrum of Americans than even single-family homeownership.
An example of how amenities are driving the apartment market is the new Grand Venetian in Dallas. The 514 unit apartment complex has an impressive list of amenities, including: a swimming pool area modeled after that of the Mirage hotel in Las Vegas. It includes a sand beach and a food court where residents can charge meals and snacks to their apartments. Their 3,200 square-foot fitness center has a cardiovascular room, a weight room, two tanning beds, a heated whirlpool and an on-staff personal trainer. The property also has an automated bank teller machine (ATM) and several outdoor sculptures by a noted Italian artist. Compare that to a concrete birdbath and plastic flamingo found outside your units.
Other apartment providers are adding some over-the-top amenities to their luxury apartments too. Some larger communities have resource centers that offer a full schedule of activities. Common areas may feature full fitness centers with aerobics classes, business centers with computers and fax machines and entertainment facilities with big-screen television sets and surround-sound audio equipment.
Single residents love the opportunities the apartment communities create to meet new friends; for conversation, romance or even more.
The trend isn't just restricted to the new luxury apartment market. Many older buildings are adding amenities like security alarms, gated access where possible, upgraded lighting and the popular space-saver microwave ovens.
Common area amenities now often include fitness centers, aerobics rooms, business centers and children's learning centers. A putting green and car wash have been tried as well.
Owners of smaller apartment buildings are challenged to add comparable features without the large economies of scale that their larger competitors enjoy. The goal should be an entire package of connivance and services. An apartment that looks like a vanilla box may no longer be enough. Tenants are beginning to expect a rental environment that is as conducive to as comfortable a living experience as homeowners enjoy.
It's difficult for owners of smaller apartment buildings to replicate expensive common-area amenities. A community of 500 apartments can afford to put in a much better amenity package than a building of 5 units ever can. Consequently, attention to service, detail and creativity become necessary.
A winning strategy for smaller landlords is to add comfort and value to individual apartment units; perhaps high-speed internet, upgraded appliances and a monitored alarm system. Quality window-dressings and upscale hardware add class to any unit and usually last much longer.
Owners who want to be competitive, but can't afford their own exercise room and a pool, can always go to a local health club and cut a deal for the residents to use the third-party facility.
Innovation makes sense too. How about providing renter's insurance? Optional or discounted, if necessary. See our pages on the subject for inspiration.
Use Surveys to Determine Interest
Regardless of the rental community's size, amenities should be well matched to the area's resident profile. Collecting data about residents' demographics, preferences and expectations helps guard against spending money to provide amenities no one wants. For example, say you want to attract corporate executives who will live in the area for only a few years. The amenities package in a large complex might include a swimming pool with lap lanes, an aerobics studio, a cigar lounge and a formal entertaining area with an upper floor view and a garden. Those features are not the perfect package for many tenants, but they may reflect the lifestyle of your anticipated residents.
Clearly a small landlord cannot compete at that level. However, more tenant privacy and the owner's personal attention to small details and service are a strength the big guys can't offer.
Surveys and focus groups may provide other important data as well. However, the most cost-effective research may be to just solicit feedback from your own residents, rather than hiring an independent consultant. You may discover that urban street noise and adjoining apartment music is one of the biggest issues. In that event, reducing sound transmission into and between apartment units may be something that retains tenants and is worth advertising.
Apartment association reports also provide good insight into the relative popularity of various amenities. Their research documented that swimming pools and fitness centers are among the most sought after amenities. That information convinced many developers to spend the most money possible on those two common area improvements. But you may find that a place for an outdoor barbeque is just as important to some tenants, and more easily accomplished by a small operator..
Regardless of size, amenities should be well matched to the community's resident profile.
One of the hottest new amenities is wiring for high-speed Internet access, such as a T-1, ADSL or broadband cable-modem service. Some communities are providing the high-speed Internet access option now, with a view toward using the capabilities for building management in the future. Residents will be able to post service requests, pay their rent and communicate with off-site management through the Internet. These services typically are installed and operated by a third-party provider. The upfront cost to the building owner is nil, and revenue sharing is common after the provider recoups its initial investment. The zero start‑up cost means smaller operators can consider offering this amenity without making a major investment. Communication technology will be important in everyone's future, even the small apartment owner.
Amenities usually pay for themselves through higher rents, often double the return on the basic apartment.
Let's say you can make 10% on your real estate investment. Now consider that it costs about $300 to put in a space-saver microwave that should last seven to ten years. You only need to raise the rent $5 a month to get a five-year pay-back.
Another strategy for owners of smaller operations is to focus on service, rather than concrete amenities that require a lot of space and special equipment. Advertise that you are small so that you can be available when they need you. Many owners do not focus on service enough. You don't have to be big to provide clean environments and clean apartments."
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