Cable for a multifamily property - any value to bulk services?

Question

For the multifamily investors out there, is there any value in providing bulk cable services vs. just having the tenants contract directly with the cable company?  The property is a 22-unit, C class multifamily complex in the Phoenix, Arizona metro area that we’re repositioning. I contacted the local cable provider to set up service and they provided additional options for bulk service. Seems like going the bulk route has the potential to only create hassles but there might be something I’m missing. Any input would be appreciated!

Brian Adams · Answer

Christina LaBorde, I have a 200+ unit deal in Dallas and Time Warner installed fiber optic so all residents can enjoy HD programming.

For this asset the basic cable has always been included in the rent. Been like this for 20 years before I bought the property, so continued on with the approach.

The bulk package was helpful as each resident didn't have to arrange setting up their own account. Also I am not a big fan of having Directv dishes everywhere and installed to my buildings.

I didn't shell out a penny for Time Warner installation. Downside have a contract with them for 8 years.

Upside is if the resident upgrades tv package, or adds phone or internet, we get a profit share. To date the revenue has been minimal.

Ronan M. · Answer

I wanted to go that route some time ago.

I called Directv and told them I will install their service in all units of a 6 unit property I have. Told them I would pay for basic service for all 6 and possibly the tenants would chose to upgrade giving them more revenue. All 6 units I offered them and the elimination of any competition for them in that building.  6 customers...one check on time every month.

In return I wanted a good deal on the 6 x basic services for the building and a hot deal on my own home service. ( I had their service at the time)

They basically told me to take a long walk on a short pier. They argued that they would rather face the competition for each unit as they would likely get some of them anyway and at a much higher monthly dollar amount (per unit) than my bulk deal.

One year on...I booted them from my home and I don't believe they service any of those 6 rental units. Their loss !!

Now...your 22 units might make a difference.

Best of luck.

Account Closed · Answer

Hi Christine,

This is an old thread but in case you still wanted more info on the topic, it is possible to be paid by your cable provider without signing up for a bulk services contract. I had the local cable company install all the cable and ethernet as well as pay a significant door fee all without signing up for bulk services. They wanted exclusive access to the cable they installed for a decade but note I did not give them exclusive marketing rights which means any other cable provider could come and offer service and potentially offer me the exact same deal.

The other cable company offered the same thing with a bulk contract which I turned down.

I would like to know if anyone has an existing wired building and is charging the cable company access to the wire without a contract or on a customer basis?

Lak Chilam · Answer

Hi , Mine is 65 units in Atlanta . Comcast just called me as the contract is expiring proposing $50 upfront compensation. Since mine is less than 100 unit there is no profit sharing quarterly and we cannot combined the other property units itseems.

What is the best I can ask them? And what options that I can give them to consider to give high compensation like mentioning preferred cable company to tenants etc

Thanks. Lak

Christina L. · Answer

Jeff Beard that helps, thanks. I guess the pros could be from a marketing or income perspective, like you said. I need to do a rent market survey anyway so I could ask other properties how they approach cable services. If the local competition does (or doesn't) offer bulk cable, then that's something to consider.

Christina L. · Answer

@Gino Barbaro - great to know, thanks. I assume that was for a bulk contract vs. access only? The access only service also requires a multi year contract (in exchange for work they're performing at the property), so just clarifying.

Gino Barbaro · Answer

@Christina LaBorde

Hi christina

we just closed on a 156 unit and the cable company had signed a contract with the previous owner.  The total that was transferred to us was 45,000.  You can try to request a bonus if you sign up with your provider.  You will have to sign multi year and give them the exclusive, in return they will give you a bonus

Gino

Christina L. · Answer

Just wanted to add some final details to this thread following my research in case there is interest. The local Phoenix cable provider I’m going through requires the property to be 100+ units in order to qualify for incentives. Whether or not that can apply across multiple properties that add up to 100 units, I’m uncertain but it’s something that may be a negotiation point in the future. Also, since we’re repositioning this asset and will sell it when the cap ex work is complete, I checked with some local experts to see if a bulk cable contract would create any issues for potential buyers. The feedback I got is that buyers would prefer to see an access-only vs. a binding bulk contract since those contracts transfer to the new owner.

Albert Bui · Answer

HI Gino,

Did they just offer you approximately 300 dollars per unit upfront and a share of the revenue or how did that 45k work out?

Gino Barbaro · Answer

Christina LaBorde

Hi Christina

We just closed on 156 units and the cable company gave us 45,000 as an "incentive" to offer on our property.  I don't know if they would offer a bonus on a smaller property, but it can't hurt to ask.

Tell them you will give them the exclusive but you want compensation to offer their services.  In some markets, the lack of competition does not allow this to work.

Good luck on the reposition

Gino

Cable for a multifamily property - any value to bulk services?

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