Real estate investors are always looking for ways to increase their rents and improve their cash flow on their multifamily properties (and single-family rentals, too). But what’s left to optimize and/or add value after the hard services, the flooring, paint, and common areas are already outfitted? My guest, Jim Monk, not only found this overlooked amenity but has built a business around it!
As any good real estate investor knows, maximizing space and providing amenities will strengthen tenant occupancy, as well as give you the ability to charge higher rents. One area that some overlook is the closet. Yes, the closet!
After 20 years in the multifamily renovation space, Jim Monk saw a massive opportunity in which the closet was being dramatically undervalued.
The multifamily closet has not changed in the last 50 years. For decades, the closet was a bland, uninspired space that was functional (at best). Thanks to poor, haphazard construction, most closets offered less than 42% of their potential storage capacity.
Over the past two decades, consumer demographics have shifted dramatically. Millennial and baby boomer renters today are not satisfied with a place to live; they want a unique residential experience enhanced by resort-style amenities (this is becoming increasingly important to renters since COVID). They seek attention to detail that promotes an exceptional quality of life. They want to know they’ll have enough space for their stuff without renting storage or living in a cluttered, claustrophobic environment.
On today’s episode, Jim will talk about how you can increase your rents 2% to 5% per unit, which is a healthy increase, even if you have a smaller portfolio. For those renting out single-family homes, this episode will show you how and why optimizing your closets will increase your NOI.
- From a financial services career to creating Clozzits
- How Jim started his company
- Increasing multifamily NOI with closet upgrades
In this ultra-competitive real estate environment finding an edge to maximize the rent and the NOI is crucial and can separate you from your competition
- How Jim is attacking the 95% of existing multifamily inventory
- Listening to the marketplace enabled him to make the strongest product play
- How Clozzits drive the cost down for their products
- How companies are adopting Clozzits to increase their NOI
- How they work with property owners and the numbers behind it.
- The difference in working with A-Class and B-Class properties
B class property owners are looking for something additional that will allow them to differentiate themselves from other properties
- What real estate markets are doing well right now
- How much space can be optimized with Clozzits vs. other systems
- Utilizing cost segregation
If you’re able to add another line item to your cost segregation schedule, adding bonus depreciation for the closet space is a brilliant strategy.
- Working with student housing, senior housing, and condo property owners
- Why the competition is calling him
- The beginning stages of building his company and how they had to pivot for profit
What Jim Would Tell His Younger Self:
Focus on finance more. Start saving now and be creative on how you do it.
What His Biggest Risk Taught Him:
It’s important to know and listen to your team.
Jim’s Book Recommendations:
Blitzscaling: The Lightning-Fast Path to Building Massively Valuable Companies (Reid Hoffman and Chris Yeh)
Social Handle: @jimmonk