Project 3: Proposal
November 4, 2015
Mr. Adam McInturff
This proposal is directed to the management and investors of Park Place Apartment Homes. The
intent is to recommend the construction of a car washing area as a means to remaining
competitive in the residential rental market.
The purpose of this proposal is to improve the quality of living for the residents of Park Place
Apartment Homes, while also increasing the profitability of the apartment complex, through the
addition of a car washing area. By adding a car washing area to the list of current amenities,
residents will be able to properly care for their vehicles on a consistent basis. Concurrently, the
investors of Park Place Apartment Homes will be improving the property’s appeal and market
value, thereby maintaining a competitive edge in todays’ residential rental market.
In an article by Fortune Magazine entitled, ‘Young People Can Afford Homes They, Just Don’t
Want to be Homeowners’ author Chris Matthews brings to light the current trend of a growing
renters market. He points to Millennials’ decision to resist the pressures of conventional society
to get married, settle-down and purchase a home once it becomes financially feasible, as the root
cause. On average Millennials are postponing these life milestones well into their 30’s as
opposed to the previous norm of late 20’s. This tendency has dramatically affected the supply
and demand of the residential rental market.
With an increase in the number of renters, there has also been a boom in the development of new
apartment complexes across the nation. According to the Star Tribune, a newspaper based out of
Minneapolis, more than 3,400 new apartments have been built in the past two years, and yet the
Twin Cities is still recording a decline in the average rental property vacancy rate.
The arrival of brand new apartments in a community not only provides residency for first time
lessees, but also gives occupants of older rental properties the option of moving, thereby
upgrading their living conditions. The newest apartments being built today commonly feature
amenities such as billiard rooms, club houses, tanning booths, game rooms, swimming pools and
fitness studios. Dated apartment complexes’ ability to remain competitive in today’s rental
market and ensure lease renewal is entirely contingent on a property owner’s ability to provide
amenities commiserate of newer facilities. According to occupancyheroes.com, failure to do so
results in higher occupant turnover rates, lower monthly rental fees and lower quality tenants. It
is in a landlord’s best interest to update their facilities considering that a single occupant turnover
costs on average $2500. Also, based on income-producing property appraisals, there develops
the risk of property value depreciation.
Incorporating new amenities to older properties is often times difficult due to the constraints of
already being established and requires creativity when considering their addition. Park Place
Apartment Homes has done an exceptional job of compensating for their lack of amenities by
creating a clean, hospitable and safe community. Park Place Apartment Homes frequently hosts
events, such as painting parties and solo musician concerts, which encourage interaction between
neighbors, thereby strengthening communal bonds. Additionally, the grounds keepers and
maintenance staff maintain the property superbly. Nonetheless, tenants are still considering other
properties for residency because of the absence of a car wash area.
The inclusion of a car wash area provides residents with the ability to wash their own vehicles on
a regular basis, which in turn creates a cleaner and more presentable community. This feature
also helps Park Place Apartment Homes stay competitive by offering an amenity that is often
times only featured in the newest of apartment complexes.
This car wash area would be built where the unused and dilapidated basketball court currently
exists. The design would be centered on the installation of a double canopy car port offered by
Creative Shade Solutions. Similarly designed car wash areas can be found at Cherry Creek
Apartment Homes located in Hermitage, Tennessee. With regards to the installation of necessary
plumbing, the proposed construction site is located near a water spigot used by the maintenance
staff, which lends itself to a simple adaption of the current configuration to accommodate the
needs of the car wash facility.
Cost / Timeline
The total cost for the construction of a fully functional car wash facility is reflected in a quote
provided by Barnard Construction. The anticipated time to complete construction is 30 to 60
days, contingent on suitable weather. The following graph highlights the major phases of the
construction process and the associated costs:
Asphalt repair and sealing
Installation of required plumbing
Excavating and pouring of concrete footers
Construction of car port metal framing
(2) PVC/Vinyl canopies purchased from Creative Shade Solutions
Concrete ramp to provide access the proposed site
The benefits of building the proposed car wash area begin with tax deductions. While the initial
cost of construction may be high, the IRS has allowed for tax deduction claims to be filed when
an improvement has been made to a rental property that functions as a source of revenue. This
write-off is a provision of Section 179 of the United States Internal Revenue Code and will allow
for a recouping of nearly a quarter of the cost over a ten year period. The benefits of including
this amenity continue when considering the average occupancy turnover rate of $2500 per
occurrence. The car wash area being attributed to three lease renewals can be equated to $7500,
which exceeds the total cost of construction.
The previously mentioned benefits are easily monetized and are reason enough to invest in the
proposed car wash area, but there still remains the less tangible, but equally important benefit of
customer satisfaction. Guy Letts is the founder and CEO of Customer Sure, a company that
specializes in providing businesses with customer feedback. In an article entitled Top Ten
Benefits of Customer Feedback, he describes how customer satisfaction has an effect on
referrals, renewals, repeat business, loyalty, retention, customer acquisition, competitive
advantage, reputation and sale opportunities.
In conclusion, by providing residents with an area to maintain the cleanliness of their vehicles,
Park Place Apartment Homes will be increasing profitability through property value appreciation
and the lasting effects of customer satisfaction.
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