Multifamily Blogs
5 Great Ancillary Income Opportunities Your Property Should Implement
5 Great Ancillary Income Opportunities Your Property Should Implement
Generating additional revenue is nice
Ancillary income is quickly becoming the Midas Touch for many multifamily and student housing properties. The economy has made it increasingly difficult to raise rents for many properties and tax increases have outweighed reasonable rent increases in others. In a stroke of brilliance ancillary income makes its debut as the star of the show.
5 Ancillary Income Options
There are some standards all property managers should use including:
- Late Rent Fee – while this should be a flat rate, some suggest that the rate should be calculated at around 8-10% of the average rent.
- Trash Fee – $5 – $9 per month seems to be the threshold for most multifamily properties and is one of the additional charges that have the least resistance from residents
- NSF Fee – This is standard practice across most industries yielding $35 – $50 per incident. Following this up with only accepting guaranteed funds (i.e. money orders, certified checks, etc.) for the next 6 months is normal, with a caviate that checks will no longer be accepted after the second incident.
- Concierge Service – There has been a growing movement to provide a higher caliber of services and amenities as a resident retention model. Door-to-door trash service, package delivery management and notification, and information services are a few that seem to be of great interest to most residence. Partnering with local vendors for services has been a common trend as well.
- Lease Buy-Out Fee – A 30-day notice plus one months rent upon early termination will motivate residence to at least stay the term of their lease, otherwise yielding an extra month of rent. Its also not unusual to charge back any concessions negotiated at the beginning or charging a 2 month rent termination fee if concessions cannot be charged back.
Adjusting your fees to include these ancillary income options will positively impact your bottom line over time. Its amazing how these little bits of additional income accumulate to become a significant annual revenue stream. When considering other ancillary revenue remember to be creative, be fair, and bring value so as not to be arbitrary. You will need to defend your position at times and having justifiable motives will win in the end. Let us know about any ancillary income that has impacted your property.
