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What to Avoid: Amenities in Real Estate Investments

build-to-rent podcast market research Sep 07, 2021

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We had a... should we call it a horror story? On the development, we did somewhat recently. Why don't we talk about that, the pool and clubhouse in Vineyard, Utah? Let's talk about something to avoid when you're cooperating with other builders and/or investors to set up amenities in a commercial investment development.

Sherida Zenger

That was more of a master-planned community. Several builders were in here. We had two projects in the north end of this master-planned community and we were tied to their clubhouse. They were going to build the clubhouse.

Steve Olson

They're a master HOA that we have to abide by. But by building within our own sub-HOA, we had access to whatever it was they were gonna build. Their pool, their clubhouse, their trails, their pickleball courts, their tennis courts, all of that.

Sherida Zenger

We finished this project. And we were told, if I remember correctly, it was like six months later this clubhouse was supposed to be done. Yeah, literally, it was like two and a half years later, maybe that it would end up being done. We had tenants that were expecting to have amenities that had nothing. But we're still paying an HOA fee. Which got them very upset.

Chase Leavitt

From this story, it's important to understand what you have control over. You're being told one thing, but things can happen. And if it's out of your control, you need to be careful about what you're promising, or what you're saying to your investors and the tenants.

Steve Olson

The bottom line is don't advertise amenities to your tenants in your lease up that you don't have control over. We're gonna have a clubhouse and pool. That's a hard conversation for the property manager to have, you know, when lease renewal comes, hey, you want to renew your lease? Well, I did. But yeah, I don't have any of this stuff that you promised.

And they paid for it. And yeah, you have no way to facilitate that or make that go faster. Because it's some other builder that doesn't care. So I think we learned that that, you know, we don't advertise, we don't assume that somebody's just going to come in and complete this. And ideally, to those core amenities that you really have to have. Whatever you decide those to be, you have to have control over them. Otherwise, you may consider not doing that deal.

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