Seasonality: Operational Risks to Your Business #6 – EP 343

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The South attracts snowbirds–and hurricanes.

The Southwest is a nice place to live for most of the year–but you’ve got to be prepared for 100+-degree days.

The Midwest is wonderful, but the snowy season, especially here in Cleveland, can be brutal.

So, why am I talking about inclement weather today? The quick answer is because storms or brutally hot (and cold!) weather makes it much, much harder to lease units, even nice ones.

This episode of our Operational Risks series is all about seasonality. You’ll learn how to avoid having to lease an apartment around the Christmas holidays, how to keep your tenants in to stop your properties from hitting the market at the wrong time, and some tips to handle your leases and prevent this threat from hurting your bottom line.

Key Takeaways with Josh Cantwell

  • Why some apartments can feel all but impossible to lease at certain times of the year.
  • Why I always prefer to handle moving, unit turns, and construction in the spring, summer, and fall.
  • The factors that make December move-outs so difficult to deal with.
  • How to structure your leases to make seasonality work in your favor.

Josh Cantwell Tweetables

“We've realized this threat of seasonality between December 1st and March 1st that very few people want to move.”

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Josh Cantwell: So, hey, welcome back to Accelerated Real Estate Investor. I’m your host, Josh Cantwell. Today, we’re going to talk again about operational risk and one of the operational risks that we’re going to discuss is seasonality. We’re going to talk about that today on the next episode. Here we go.




Josh Cantwell: All right. So, we’re back. I’m so excited to be with you. Thanks so much for subscribing, rating, and reviewing the Accelerated Investor podcast. I would love to talk about multifamily on this show. And today we’re going to talk about operational risk, which is seasonality. So, let me explain what I mean. In different parts of the country, it’s different seasons. Of course, in the South, you have the snowbirds that come in between Christmas and Easter. That’s a season. Also in the South, you have the hurricane season. Obviously, in the Southwest, you have the hot season, the dry season where it’s 100-plus degrees in Arizona and parts of Nevada, Las Vegas, Southern California. In the Midwest, where I do a lot of investing in the Greater Ohio, Cleveland, Columbus, Cincinnati areas, you have the season of the snow, especially in the Cleveland area. And so, one of the operational threats to your business and to your investments that you have to be aware of is this seasonality, which has a lot to do with the weather.


And so, one of the things that we’re managing right now is that we’ve realized in our portfolio of owning this for the last four or five or six years is that if we have renewals, here’s a perfect example, if we have renewals that are taking place in October or November and somebody is getting a renewal notice and we’re trying to bump that rent by $50, $100, $200, and we send them a renewal letter and they decide to move out in October, November. Well, guess what happens in December? Yep. Christmas, the holidays. And once people get their Christmas trees up in, let’s say, early December and they’re going to celebrate the holidays, how many of them do you think want to move out? So, if we then go into the new year, January 1st, how many people do you think want to move out or move into an apartment on January 1st? Not too many. And then in the greater Cleveland area, one of our seasonality operational threats is that February is our worst month of snow that we get all year. It’s always the worst. It’s always the coldest, we get the most snow. Best month is August. Coldest month is February. And so, how many people do you think want to move in a foot of snow in 20-degree weather below zero sometimes with the wind chill? People don’t really want to move.


So, we’ve realized this threat of seasonality between December 1st and March 1st that very few people want to move. So, if we have a unit that becomes vacant in November, we can be marketing really hard through and Craigslist Ads and through Facebook Marketplace and open houses and open house signs and resident referral letters and resident referrals where they can get a credit off their rent if they refer us another resident, all these things we could be doing and still those units won’t lease out. Why? People just don’t want to move during Christmas. They just don’t want to move when it’s super cold outside. And so, one of the things we’ve done is we’ve started for the last couple of years, moving all of our renewals into Q2 and Q3. Basically, from April 1st through the end of September, we want all of our leases to renew. That’s when the leases expire. So, when we sign people up on a lease, we’ll do a 13-month lease or a 14-month lease, or a 15-month lease so that their lease will expire basically from March 1st through September 30th. Because even if it expires on September, we can still turn the unit, get the unit released in October and have people move in November, and then they can basically stay in that unit.


But we’ve also realized that if somebody has a lease that’s coming up and it’s going to expire on December 1st and they decide to move out, we’re going to have a hard time. Even if we turn that unit, we’re going to have a very hard time leasing that unit out and filling it in December, January, and February. Again, Christmas, New Year’s, snow. So, you have to be very aware as you create your business plan with your multifamily assets. You have to be very aware of this real niche operational threat, which is seasonality, again, a lot of it having to do with certain times of the year, the weather. Maybe there are certain events or functions, maybe there are certain festivals that happen in your market where more people come in, more people vacation, more people are moving, all these different types of things. And I would much rather deal with all of the move-outs, renewals, move-outs, move-ins, and unit turns. I would much rather deal with that in the summer. I’d much rather have our construction company from March 1st until September 30th when the weather’s great. You know, it’s easy to navigate, it’s easy to move people in, move people out, turn units, buy materials, store it, and not have to fight the snow and fight the weather and fight the Christmas holidays.


I’d much rather do that than have units come due and somebody moves out December 1st, then we’ve got to turn the unit, and guess what happens? People are taking vacation time over Christmas. And so, contractors are out and workers are out and everybody’s taking their vacation time. And it’s really hard to get everybody working on the same level at the same pace those last two weeks of December because of Christmas. And then the same thing, when people are missing, because there’s a lot of snow on the ground and the roads are dangerous in February, it’s hard to turn those units. And so, you’ve got to be very aware of that. Maybe you have a building that’s near a school or a university. I own 164 units with my buddy, Jack Patrick. It’s called the Heights Portfolio. It’s in Shaker Heights and Cleveland Heights, Ohio. We bought it for 9.2 million. It just appraised for $14.2 million. And so, we’re excited about that but during COVID when that property had a lot of students and a lot of people in the medical field so living and staying there, these grad students, these medical students, when COVID hit, they didn’t come back to school.


So, we couldn’t bump rents like we had some occupancy troubles and a lot more vacancy than we were expecting. But also now that COVID’S gone, we also now have to make sure that we manage that where we know that these leases are all going to come due in basically June, July, August, and September because there’s a lot of students that will move in, grad students that will move in, in August and September. They’ll go through medical school or go through nursing school or dental school or whatever it is and then they’ll leave in July. And so, we’ve specifically set that building up so there’s a lot of renewals in the summer. Now, Sheree, who’s our property manager of that portfolio, has done an incredible job of raising the income. She’s raising income by almost $28,000 a month over the last two leasing cycles. This past summer and the summer before that, she’s raised the income by almost $30,000 a month because she was able to do all these renewals and bump the rents $100 a month and then bump them again, roughly $100 a month, a little bit more than that. And so, that’s made an incredible increase in the value of the building. And so, we’re actually testing that property and putting it on the market. And we’re going to see how the market reacts to that property because it’s highly occupied, it’s highly stabilized, and we refinanced that a couple of years ago. We put a loan on it for 3.65%, a long-term loan.


And so, that’s an assumable loan. And so, a really great opportunity to buy that property. Buildings right now are probably going to sell from the 14 million to 14.5 million range. And an assumable loan of 9.9 million is the loan assumed that loan of 9.9 million at 3.65%. Knowing that you have these summer leases, the seasonality to deal with. So, there are some real examples of a very niche operational threat, whereas if you have a lot of leases coming due in the winter, make sure you sign 13, 14, 16-month leases so that over a year or two you move all those leases into the prime season where the seasonality works in your favor.




Josh Cantwell: All right. Well, there you have it, guys. Listen, I appreciate you listening to another solocast about operational threats to your multifamily deals, your multifamily rent role. If you enjoyed it, go ahead and smash down the subscribe button. Leave us a rating and a review. I’m always so honored. Every time I get a rating, every time I get a review, I am so honored by that. I’m so excited to get them and I read them all. And just every time we get one, I’m like, “That’s awesome,” and we’re impacting somebody else. We’re impacting somebody new who can really benefit from what we’re teaching them and what we’re saying. And so, I really love the ratings, the reviews, every time we get them. So, thank you for those.


And also, if you are looking to take your business to the next level and you’re looking for coaching, mastermind, partnering, and all of the documents that you need to help you in your real estate journey to level up in the multifamily and commercial apartments, go visit to apply to be considered for our partnering mastermind and coaching program. And also don’t forget to go visit and there you can buy a ticket to our upcoming virtual event. At our virtual events, I teach everything that I need to give you the absolute best foundation to buy your first hundred-unit building and acquire your first $10 million of multifamily real estate. All right. So,, Don’t forget to leave us a rating and review and we’ll see you next time. Thanks so much for being here.

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