Ancillary income can significantly increase your bottom line, but additional fees are not always an easy sell to potential tenants.
One of the most fruitful programs enlisted at Dallas-based Riverstone Residential properties is its Bulk Telecom program, where it bundles television, Internet, and phone services. The bundle is presented as a separate line item fee to the resident and included in their monthly obligation to the property – but it's benefit makes it an easy sell. The package is priced at about a 30 to 40 percent discount to the market’s primary telecommunication providers.
“It’s very lucrative to both properties and to residents,” Rees says. “A resident is going to pay $140 for high speed internet and television services directly with a provider, however in a bundled program at a property, we can sell it to the resident for $75. Who would rather pay $140 than $75 for the exact same product?”
He also suggests that operators follow through with less-direct methods to make money, like renter's insurance.
“Don’t dismiss renters insurance,” Rees says. “There might not be a lot of ancillary income in renters insurance for the property, but the amount of money that a property can save by not having to pay for losses caused by residents, where those losses will be covered by a renter’s insurance policy in place is paying is a huge factor.”
A tenant is more willing to come out of pocket to pay $10 a month knowing that everyone around them has a policy, and that their personal belongings are insured.
Similarly, Seattle-based Pinnacle takes a thoughtful approach to communicating mandatory fees with tenants.
“Ultimately, the last thing we want is to have residents upset about a great new service that was intended to create higher satisfaction,” says Woody Stone, Pinnacle’s senior vice president of operations. “If we fail to understand and provide the services that have a clear value proposition to the resident, they will undoubtedly feel ‘nickel and dimed,’ which means they won’t stick around.”