Additional Income Stream and 0% Interest Loan w/ Security Systems

[Hunter Preston]

Here's an idea for a possible creative additional income stream for rental properties AND obtaining a small 0% interest / net neutral loan for each property: home security systems. 

1) Negotiate a deal with an alarm company to be paid as one of their sales reps (ie. $500 upfront for each "sale" of a security system for each of your properties). Many security system sales reps can be paid between $400-$700 for a 3 year contract @ ~$40 / month. Conservatively, $500 would be a fair payment - especially if you have many properties (sales) that you could bring to the table.

2) To obtain a 0% interest loan / net neutral deal, you would charge tenants an extra $26 / month for the benefit of the security system. At $40 / month over the 36 month contract, the total cost over 3 years would be $1,440. At $26 rental increase x 36 months + upfront $500 that you make per deal, this would balance out the $1,440 cost and make a net neutral deal while obtaining $500 upfront per deal.

Let's expand this concept and say that you own 100 properties. By providing tenants with a security system and charging them an extra $26 / month, you could make $50k upfront as a 0% interest "loan" that is paid off over 3 years.

3) The next obvious step to create an income stream would be to simply charge more than the $26 / month. Let's say you charge tenants $35 / month for the new security system. At 100 properties, this would make you an extra $900/month profit while still obtaining a $50k 0% interest loan. If the extra income stream is all you care about, it would be easy to play with the numbers and negotiate a deal with an alarm company to get less (or no) money upfront and instead agree on a lower monitoring rate.

The numbers make more sense with the higher volume of properties and obviously the situation depends on where your properties are located (A, B, C, or D class neighborhoods, etc.). It may be a tough sell to tenants in rural properties to pay an extra $35 / month for a security system - however, for many other locations this can be a selling point for prospective tenants and a reasonable rate to pay for a security system (many security system owners are paying $45-55 / month).  

I personally have a background in security systems, so if anyone has any further questions regarding alarm systems (typical costs, technical questions, logistics, etc.), please feel free to PM me!

What do you think? Could this idea work as an additional income stream and/or 0% interest loan?