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What are the Top Sources of Ancillary Income?

Ancillary income for multifamily properties is always a hot topic, both for punitive fee-based charges, as well as service upgrades, and was a compelling session topic at the 2017 National Apartment Association Education Conference and Expo.  According to Chase Harrington, COO of Entrata, ancillary income averages 4.4% of scheduled monthly charges, and he shared their research on the top 20 sources of ancillary income: Additionally, the panelists at the session, Gunti Weissenberger of Westover Companies, Kellie Hughes of Mill Creek, and Robert Speck of Bonaventure, shared their top 10 sources of ancillary income: Westover Companies Mill Creek (Modera Brand) Mill Creek (Alister Brand) Bonaventure Utilities Garage Early Termination Fees Late Fee Income Early Termination Fees Parking Parking Garage Income Laundry Early Termination Fees Laundry Income Bldg Facility (Renters Insurance) Month to Month Fee Amenity Fee Late Fee Pet  Rent Pet Income Storage Pet Premium Month to Month Premium Water Application Fee Administration Fee Laundry Income Billing Fee Pet Premium Application Fee Valet Trash Cable Internet Initial Pet Fee Initial Pet Fee Application Fees Late Fee Administration Fee Misc Income Pet Move-In Fee Short Term Premium Late Fee Storage Parking Income   The session also shared some data from NAA on actual ancillary income averages in some top metro areas:   The panelists also shared some insightful comments about specific ancillary income options: RUBS - Gunti Weissenberger indicated that they don't prefer using RUBS as their residents don't like the way utilities are broken out.  He mentioned that when they switch to......
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Other Income is a Gold Mine

Ancillary Income for Apartment CommunitiesAre you unconcerned by those ‘inconsequential’ miscellaneous income lines?  Well, “there’s gold in them thar hills.” Frequently in our multifamily property evaluations, we see money left on the table. IREM’s Income and Expense Analysis shows a downward trend in Other Income from 2006-2010 perhaps following the recessionary decline in rents during that time. That needn’t be the case. For example, in the category of Low Rise Buildings of 24 units or more, IREM reports for 2010 medians of $.30 per square foot, 2.7% of Gross Potential Income and $266 per unit, down from $.47, 4.2% and $406 in 2006. How about $1.03 per square foot, 9% of GPI and $931 per unit? There may be differences in terminology but we count the following as Other Income: Termination fees Late and NSF Fees Application fees Pet rent and pet fees Parking fees Vending income Telephone, data and cable TV commissions Administrative fees Short term premiums and amenity surcharges (often considered “rent”) When rents are soft, Other Income can generally be collected with regularity. But you need to make sure that they are clearly provided for in your lease documents. There are many more areas that provide opportunities for ancillary income, particularly in data technology. However, you must provide value to the residents.  Jim Carrillo, portfolio director of the Towbes Group who manages 2,200 units concludes that, “Residents may not mind that they are charged for ancillary services as long as they believe they are receiving high-quality service…. If you back it up......
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