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Additional Streams of Income
Wondering if anyone has found or offers any type of continuity programs to their renters to create additional streams of income? If so, please explain.
I'm not sure I understand the question
@Richelle I'm looking for programs that I can offer to my renters to create additional streams of incomes, such as credit repair, internet service, rental insurance etc. I would like to offer that assist my renters, but also produce additional income.
@Richelle Thomas
MR Landlord suggests offering upgrades like ceiling fans for $X extra a month.
Additional Income, depending on your property types, can range from storage space, parking, laundry service or even internet/cable service.
For larger multifamily properties it is easier to discover auxiliary income through providing services and/or products to serve the tenants for an upcharge. It is basically limited to your imagination.
Do keep in mind though that if your goal as an investor is to create passive income and wealth building your time may be better spent focusing on your next deal and managing more aggressively your current holdings. Being a Landlord is simple but it is not easy. My philosophy is keep it simple and as easy as possible. One more task just to gain an extra $10 per month non-passively ends up looking like a loss to me.
#2 Mobile Home Park Investing Contributor
- San Antonio, TX
I've heard of others renting washers and dryers to tenants. Though, I would think it would require some funds to be dedicated towards maintenance and future repairs.
Hope that helps!
I tend to agree with Marcus on this one. That being said, I do rent my tenants a washer and dryer for an additional $20/mo. You could offer all sorts of things from laundry to yard care, monthly housekeeping, WiFi, cable, full service laundry, dinner delivery, anything! It's just a matter of how much extra work you would be creating for yourself and the socioeconomic status of the tenant to have that much disposable income.
Eh...not to say this is a bad idea, but in my opinion, I think its more effective to just focus on the core concept of the business, the actual lease of the property to generate good profits rather than trying to nickel and dime tenants into more profits.
Obviously, items like laundry services and perhaps vending machines might work well and make since in a multifamily setting, but I think offering to wide of a selection of add-ons cause an over complexity to a business that often runs smoothest when kept simple.
In a large, class A facility, there are probably lots of avenues for setting up additional revenue streams and services, much of what can be outsourced, but for attempting to confuse a lease with different services and add on costs can often become a headache to manage on top of the tenants.
At the very least, instead of offering additional services, I would simply partner with local businesses who might allow you to profit from discount, bulk pricing which you can then up charge to tenants.
@Denayer Burns let's address your ultimate outcome of making more money from exiting properties a slightly different way. Instead of adding on incremental paid services perhaps look at incremental free services you can give them that way they stay longer and you can command a premium for rent.
Example:
- negotiate with a local business (or two, three, four...) an exclusive discount for your residents. You can then give your residents a Resident Card (print 250 at Vistaprint for $15) that they show at time of purchase.
- I did this for a large apt community in Cincinnati and it helped reduce our turnover and increase our bottom line. Plus, it makes them want to renew to keep getting discounts and because I'm constantly adding more local biz. If you have a single family house rental then you can do the same program - you'll just need to find the right biz that wants to make more sales and grow with you as your portfolio expands.
one of the services you mention is renters insurance. I was just thinking of the conflict of interest factor. If you sell them a renters insurance policy and they're living in your rental unit. Let's say they have a something happen (e.g. they cause some damage to your rental unit) and they need to claim from their renters insurance, you then become judge and jury on their claim. It just seems like a legal minefield to me.
Renting them a washer/dryer may be a simpler way to make some money.
There are a couple of things I've heard of - offering rent on a Pay Day Plan and charging a higher rate. Pet fees, smoking fees.
@Denayer Burns there is a lot of opportunities to generate additional income from added services. My renting tenants washers and dryers meant the difference between being a float and sinking some months when I stated out. Jeffery Taylor of Mr Landlord fame has written a couple of books on the topic. Everything mentioned above is in his books and more. I totally disagree with those that say it's not worth it. Jeffery tells you how to do it so that it takes little time and has great returns. Obviously some of the pitfalls mentioned can happen but really you should learn how to do it right and then decide if it's worth it or not.
Which of his books would you recommend - especially for this issue? His material online is where I got my pet and smoker fee ideas, and I had already planned to collect rent weekly, but read a lot of good stuff on his site about it, too. I do mark my rent up more for weekly collection than he advises, though. I just had a hard time figuring out which book would be best.
@Leslie A. I read his "Landlord's Survival Guide" but it's been a few years. Not sure if he's updated it. It focuses a lot on retention but has a chapter or two on upselling. I've heard the "Fee Bible" has some good ideas but have not read it myself. Not sure if he wrote that or not. I know it's on his site. It might even be on the BP site.
Seems like you are already doing many of the easy things. Probably not too many home runs left but you never know.
Installing solar panels could generate more passive income, but it wouldn't come directly from tenants
Do you have experience helping people with credit repair? How could you charge them for internet access, aren't they allowed to setup their own account with the cable provider? How would you make money on rental insurance? Are you an insurance broker?
You could focus on acquiring more rental properties to create more cash flow!
@John Horner
I do not have direct experience with credit repair myself, however I have a business partner who will be providing those services. Ultimately my goal with the credit repair it create long term clients. What I hope to do is to take my tenants from renters to home owners. My husband is a broker, we own a real estate company.
As far as the internet access goes, there are several companies that will allow you to act as an agent. There are also some multi-level marketing companies out there that offer a variety of utility type services as well. I'm not really interested in doing the multi-level marketing bit. I've been doing a bit of research on the rental insurance, I know there's got to be a way to make it work, I just haven't found it yet. It's funny that you ask if I'm an insurance broker, actually I'm not. I'm a part of the corporate rat race.
@Landon Elscott and @Marcus Curtis
You both make excellent points and and have pointed out things for me to consider. I work in conjunction with my husband investing and managing our properties. I have to say that regarding investing he is really the brains behind the operation and is always looking for deals. I, on the other hand am the detail person, looking for opportunities to maximize the asset. Although some of the income streams associated with continuity programs seem to yield a relatively small return, I think that over time and with the acquisition of more properties they will soon prove to increase cash flow. Now, with that said, I am still new to this, while he has quite a bit of experience with investing. However, my approach is to know the demographic makeup of our tenants and only offer those services they would already be looking to secure.
Here's the thing, I don't know what I don't know which is why I'm here. I appreciate your honesty and feedback. Am I wasting time with this approach?
@Joe Fairless
Thank you for the suggestion, I had not actually thought of utilizing local businesses to offer discounts. I'm really interested in the idea of providing tenants with a resident card, something tangible that gives them a feeling of being connected to something. Do you find this approach works better in certain niche markets?
Just my opinion, but unless you can provide these services at a LESSER cost to the tenant than they could reasonably obtain on their own [ while still making a profit yourself] you could come across as the stereotypical "greedy" [read bad guy] landlord. Of course if you could procure a lesser rate than they could obtain on their own, it would reflect positively on you. But...can you do that?
Great discussion! I love the auxiliary income topic and have taken it on as a life mission. Far too many ideas to list. Highly recommend anything of Mr. Landlord's - he is the real deal.
Concepts to consider -
1 - yep, you don't need to draw all income from your tenants. That's a self-imposed income governor. You can do business with the entire neighborhood - just look for opportunities to serve and create value.
2 - special needs housing, dealing with people with problems and people who need super flexible lease terms, is an easy way to double or triple your income. And hey, there is no law that says you have to operate all of your multifamily the same way. Half could be set aside for short term/special needs rentals and the other half for traditional rentals.
3 - it's easier to find large pots of income ideas once your drop the landlord title and embrace a "housing services provider" title. This is a small but extremely powerful mindset shift.
4 - chasing small income ideas can lead to much larger ones. However if you are not a creative person, go with tradition. If you thrive on innovation, they put your mind to work. Everything is figureoutable.
Hope that helps some.
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Raymond
I like the idea of adding solar power to the property. Especially through a solar lease-to- buy company which many now offer. You can charge the tenant for the electric directly which would in turn pay for the leasing, and you get mostly free power and you take advantage of the tax rebates.
Funny that you mention yard care. My first "job" was mowing lawns. My father developed/owned a 5 acre tract with 18 duplexes on it. We cared for the yards initially and then transitioned the responsibility back to the tenants. We sent a letter to them, informing them of the change and offering me as an option (I was the one mowing the properties already). I had a majority of the tenants as clients, which was great work for a junior high student.
If you have kids, offer yard care service at the time you lease a property. It's likely that the new tenant will opt in since it's the first option they hear. The yard can look good, and you can instill a strong work ethic in your children.
Washers, dryers, refrigerators are also good add-ons as others have mentioned.
Sam
Thank you! Got it now!