To advance the mission of finding auxiliary income streams that could exceed gross scheduled tenant rents and to promote innovative landlording, I offer another fictional story:
Robert Newhart is a growing fan of the collaborative economy, so naturally he was attracted to a holistic housing offering that includes a car!
Newhart’s work day starts at his apartment where he unplugs a battery powered 1997 Corolla and drives to work downtown.
When he parks, he sends a text message to his landlord’s assistant letting her know his parking stall number. The assistant knows it’s a signal to notify various car share groups that the car is available for hourly rental.
“Besides keeping the car clean and sending a text, that’s all I do … Then $100 shows up in my account each month. I absolutely love it,” Newhart says.
Steve Austin is the brainchild behind this rental industry mash up. Austin owns the six unit apartment where Newhart lives. It’s roughly three miles outside the downtown area, in a working class neighborhood. If it weren’t for the electric charging stations in the parking lot, Austin’s building would go unnoticed.
“I simply reacted to the market,” Austin says, “More and more folks want access to things more than ownership, so I decided to cater to them.”
Shifting from Tenants to Club Members
Newhart is more than just Austin’s tenant, he’s a club member. And Austin’s lets all his members use his electric cars. He charges a $1,000 monthly “membership dues” for his annual “apart-mobile” lease while other landlords charge $600 monthly rents.
“When you total it all up, car payment, cost of car ownership, repairs… our members actually come out $170 ahead. Austin says he’s able to get a group discount on insurance premiums and most of the cars are charged for free at downtown charging stations. “Just like at Costco, we buy in bulk and pass along the savings to our members.”
And also like Costco, Austin says he’s able to make a profit inside the spread. He says he clears around $90 per car per month after maintenance and reserves.
Leveraging Members for Car Sharing Revenue
How is Newhart able to earn the $100 he brags about? Newhart, like the rest of the club members that Austin recruits, works at one of the popular restaurants in downtown. Because he drives an electric car, he’s allowed to park in spots reserved for such vehicles. These spots are some of the most desirable locations in the crowded downtown area.
By participating in a car sharing program, an hourly peer-to-peer car rental network, Newhart splits the rental proceeds with Austin. “My car is popular because people that borrow it are able to get preferred parking wherever they go.”
Getaround.com is one of the most popular car sharing programs in town. Getaround members rent Newhart’s car three to four times per week and the Newhart – Austin partnership splits over $200 in monthly proceeds.
Doing the Math
Austin has created a very small, but collaborative economy.
He helps his members reduce their living expenses by $170 per month and gives them an opportunity to earn over $100 (50% of proceeds) with car sharing opportunities. For the members, that’s nearly $300 of hassle-free value every month!
You would think that’s too generous until you look at Austin’s profits. Each of his six units brings in an average of $290 per month ($100/unit + $90/car + $100/rideshare). That’s nearly three times what a landlord would make the traditional way!
Austin says he wants to find other ways to leverage his members and create value. “I basically help members get perks that are beyond their individual reach …. and it’s a lot of fun!” Austin says with a grin.
He wants to continue helping members collaborate. He’s considering collecting rewards from their grocery purchases and using them to drive down costs of their non-durable goods.
He is also thinking about installing carports equipped with solar panels. They could both charge car batteries and offset the apartment’s master meter bill.
I hope you have enjoyed my three-part series of fiction. Are you able to re-imagine what landlords can do? Ready to boldly go where no landlord has gone before!
Will peer-to-peer business practices change the landlord industry as they have the newspaper industry? Will your “tenant” dump you in favor of your neighbor’s “club member” offering? Leave a comment. Let me know what you think.