There is always a balance to pursuing ancillary revenue.
The generation of additional funds is invaluable, as the proceeds can be used to make capital improvements, invest in technology and bolster onsite training processes. But any fees charged beyond rent must genuinely add value for residents and not give them the perception they are being price gouged.
Essentially, there are good fees and bad fees.
For instance, a resident might be willing to pay extra for a covered parking spot near their home. But would they appreciatively shell out a $25 non-optional fee for unlimited use of the new trampoline in the courtyard? While valet trash might seem like a fantastic idea to some, review sites are filled with complaints about the mandatory add-on fee.
A general theme that seems to ring true is that residents are more receptive to optional fees as opposed to those they are required to pay—regardless of how frequently they utilize the given offering. With that in mind, here’s a look at fees that strike the balance of adding value for residents without coming across as an exorbitant, unnecessary add-on.
Pets are optional and not every resident has a pet. For those who choose to have them, the associated pet fees—whether an initial pet deposit or monthly pet rent—are relatively standard in the industry. It’s a virtual given that pet-owning residents have few misgivings about dedicating a little extra money to live with their furry friends. But the opportunities do not stop there on the pet front. Properties can also team with third-party providers that can better track the onsite pet population and ensure no revenue is lost to unreported pets living onsite. Securing 100% of your rightful pet rent can boost ancillary revenue on its own.
While pet amenities such as a dog park, pet-wash station and dog run are typically included within pet rent, communities can also connect residents with local pet-related services. Partnering with concierge-type offerings, such as pet groomers and dog walkers, can help add value and strengthen NOI.
For many residents, the reality is that they have collected too many possessions and will have to store some non-necessities offsite. But what if they could do so onsite—for cheaper than a standard storage unit? It’s a win-win for residents and operators, because residents can have their storage items on the property and the community earns extra revenue for supplying a more affordable unit.
Other rentable storage items, such as private garages and bike storage/repair facilities, also are gaining traction in the industry and are popular optional services for residents.
The work-from-home boom continues to increase, and it’s no secret that the industry has had to strengthen its remote-work options. Most of these are part of a community’s standard amenity package—and should be. However, properties can monetize some of the advanced options within the work-from-home package, such as private workspaces with conference capabilities.
Additionally, communities with a surplus of remote-work space can consider renting reserved space. More often than ever, external companies are willing to pay an apartment community to reserve a small amount of workspace on a daily basis to ensure any residents that work for the company and live in the building have a consistent place to work remotely.
In an increasingly digital world where opinions can be shared within seconds on a multitude of channels, resident perception and public feedback is everything. Excessive fees don’t reflect well and can certainly spur negative feedback. Properties that drive ancillary revenue in a measured and valuable way won’t have to worry about that problem.
Categories: Ancillary Revenue, Ops/Marketing, Thought Leadership
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