Drafting or Slip-streaming to Increase Rental Rates In Apartment Communities

Drafting or slip-streaming is a technique where two vehicles or other moving objects are caused to align in a close group reducing the overall effect of drag due to exploiting the lead object’s slipstream. Especially when high speeds are involved, as in motor racing and cycling, drafting can significantly reduce the paceline’s average energy expenditure required to maintain a certain speed and can also slightly reduce the energy expenditure of the lead vehicle or object.

In other less technical words … by drafting, I mean the practice of riding in the slipstream close behind someone’s rear wheel, thus greatly reducing the effort you need to expend keeping at their speed. If you’re riding in the middle of a big group this can, supposedly, save you up to 40% in energy. Just cycling right behind one other cyclist makes a very noticeable difference.

 

This process/system called drafting or slip-streaming can also offer apartment communities an advantage in raising rent in transforming neighborhoods. To describe the process, imagine that apartments in an older community lease for $1000. per month. A new community is built in the same neighborhood and it has all of the latest services, features and amenities. This, plus the fact that it is new, could be enough for its apartments to command rental rates of $1550. The older community would normally ask for a 3.5% ($35) rental rate increase. But now, because with the new community in the neighborhood and higher rental rate threshold, it may be possible to achieve a 4.5% ($45) rental rate increase. Drafting or slip-streaming has proved helpful to many communities with rents that have fallen behind the pace of operating cost increases and/or improvements. I particularly seek out these types of communities to purchase knowing that we need to rehab but don’t have the funds right away. I can increase the rental rates high enough to command a higher community valuation and then complete our rehab.

 

 

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