Back in December, I was touring a 48 unit apartment building near Detroit. This building had all the bells and whistles, including extra thick floors and special insulation between the tenants’ apartments to keep out noise between neighbors. While touring, I saw a dog grooming room, made specially for dog owners to come and bathe their furry friend.
When I asked about the gym in the facility (which I was told they had), they pointed across the street to the local neighborhood gym.
“We got our tenants a 20% discount on monthly classes like spin, pilates, yoga and CrossFit. If they choose to use the gym without classes, it’s a 25% discount.”
This smart approach to advertising a gym “associated” with the property, but not physically on the property got me thinking: What amenities are worth investing in on-site?
To answer this question, we need to think about a few things.
- Location
- Tenant base
- Competitors
Let me break this down using an attractive and popular amenity for many apartment communities: Playgrounds
Location
If you have an apartment building that has a neighborhood playground down the street, investing thousands of dollars into a playground for the children in your community may not yield the same results you would achieve if you were 5 miles from the nearest park. For this reason, if you owned an apartment community and thought of ways to entice people to move to your complex, it is imperative to look nearby and see if what you are offering is close by already.
Tenant Base
Using this same example of the playground, you will want to make sure your tenants would actually use a playground. If your tenants are majority college aged students or retirees, then you may be better off looking to install barbeque grills or a gym, something more age-appropriate. If however, your apartment complex is two and three bedroom apartments rented by young couples with a few kids, then a community playground could be a great addition.
Competitors
Assuming your apartment complex is in a prime location in need of added amenities, you will want to see what your competitors offer. Remember, you want to think through the eyes of your tenants and prospective renters who will be touring multiple apartments before choosing. For example, If your nearby competition offers no pet fees, it may be tough to charge your tenants a monthly fee, unless your complex is that much better than the next. In terms of the playground, look nearby and see who has one and how that affects their rents they are achieving. If it can add $20-$25 per unit per month, that can be a significant value-add to your next deal.