Increasing non-rental income in a multifamily property can be a great way to boost overall profitability. Here are some strategies we consider implementing when looking at investing in a new purchase:
- Utility Reimbursement: Implement a utility reimbursement program where tenants pay for their own utilities directly to the service provider. This can help shift the burden of utility costs away from the landlord and increase revenue.
- Laundry Facilities: Install coin-operated or card-operated laundry facilities within the building. This allows tenants to conveniently do their laundry on-site and generates additional income from machine usage.
- Vending Machines: Place vending machines in common areas of the property, such as the lobby or recreation rooms. Choose products that are popular among tenants and ensure regular restocking and maintenance.
- Parking Fees: If your property has a parking lot or garage, consider charging tenants for parking spaces. This can provide an additional revenue stream, especially in areas where parking is in high demand.
- Storage Units: If you have extra space in the building or basement, consider converting it into storage units for tenants to rent. Many tenants appreciate the convenience of having additional storage options, and it can generate extra income.
- Pet Fees: Implement a pet policy and charge pet fees or pet rent for tenants who have pets. This can be a lucrative source of income, particularly if there is high demand for pet-friendly rentals in the area.
- Advertising Revenue: Explore opportunities for advertising within your property. This could include allowing local businesses to place advertisements in common areas or partnering with advertisers for digital signage.
- Amenities and Services: Consider offering additional amenities and services that tenants can opt for at an extra cost. Examples include fitness centers, concierge services, co-working spaces, or housekeeping services. These offerings can attract higher-end tenants willing to pay for the added convenience.
- Event Spaces: If you have common areas or recreational spaces that are underutilized, consider renting them out for events, meetings, or gatherings. This can be a lucrative way to generate income, particularly for properties with attractive facilities.
- Ancillary Services: Explore partnerships with service providers to offer services like cable TV, internet, or security systems to your tenants. By negotiating bulk rates, you can receive a commission or mark-up on these services.
These are some of the areas we look at when purchasing and investing in a multifamily property. Cranking up lost profits greatly increases investor returns and the value of the property. And since commercial real estate is valued on its net income, just a small increase annually can make a big impact on the valuation, when the hold period matures.
Remember to check local laws and regulations, and consult with professionals such as property management companies or attorneys, to ensure compliance and maximize the potential of these income-generating strategies.