Creative Multifamily Strategies for Other Income

[Jason Foxx]

What are some creative ways to get Additional Other Income from a high end multi family building? I may be running an 80+ unit in the near future.

Laundry is included in each unit. Ways that we already implement are storage, parking, certain fees, etc. 

I was thinking of possibly offering a unit cleaning service for interested tenants as a way to create additional income and cover the cost of common space cleaning. Vending machines and dry cleaning are other thoughts that came to mind.

Does anyone have recommendations?

Thanks,

[Wale Lawal]

@Jason Foxx

Here are ways you can increase non-rental income in a multifamily property.

Vending

Vending machines are another low-cost way to provide an added benefit to multifamily residents. The size of the benefit is often directly proportional to the demand for the products that can be purchased through the vending machines, and we like to consult residents on their preferences. In many cases, they could be snacks and soft drinks. In other cases, they could be household basics like soap, toothpaste or shampoo.

Storage

If there is unused space in a basement or parking lot of the property, converting it to paid storage provides both a valuable service to residents and a potential way to generate a steady stream of non-rental income. Converting space into storage units has a higher upfront cost, but they are very scalable and the demand for them can be high. Once the upfront cost is recovered, the income goes directly to the bottom line.

Event-Based Fees

While most of us are opposed to new fees, it can make sense to implement a fee system that is triggered by certain events. Examples of event-based fees include application fees, move-in fees and late payment fees.

These types of fees are only incurred by tenants based on certain events so they do not constitute higher rents, but they can provide an ancillary income stream that increases NOI.

Ancillary Rent

Under certain situations, it is common for multifamily real estate owners to charge ancillary rent. This is particularly common in two situations: pets and parking.

With regard to animals, pet rent is usually charged based on the size and/or weight of the animal. Fair market rent for a pet can range from $25 to $100 per month, per animal.

In dense, urban markets (like New York) where there is high demand for parking and limited supply, it is common for multifamily lease agreements to charge monthly rent for parking on a per unit, per month basis.

Cable And Internet

For larger properties, there are certain cable and internet providers that may be willing to provide a hefty payment in exchange for the exclusive rights to offer their services in the community.

The cable and internet bills are separate from rent payments so residents have the option to purchase these services (or not) and the property owner has the potential to collect a significant upfront payment in addition to recurring monthly revenue.

Bike Storage

For multifamily rental housing that is located in urban areas and/or bike-friendly cities, there may be strong demand for onsite bike storage. If this is the case, it could be a good idea to create a secured area that is dedicated to safely storing resident bicycles. Of course, residents who wish to store their bicycles will be charged a nominal fee for this service. In most cases, it is added to the tenant's rent (as a separate charge) to make it easy and convenient to pay.

Referrals

Multifamily tenants — especially new ones — have a near-constant need for services. To assist them, it can be a good idea for property managers/owners to connect with local companies that are willing to pay a commission for a successful referral.

For example, a property owner could partner with a moving company whereby they refer customers in exchange for a small commission on each sale. As a best practice, tenants should be provided with written notice of this arrangement to ensure they are aware of it and not being charged above-market rates.

All the best!