What is the Composition of Your Ancillary Income?

What is the Composition of Your Ancillary Income?

Of course you know your revenue sources- rents and other income, or ancillary income.  But what's the next level of analysis?  Is each source being maximized?  Does your stated lease rent match collections on the rent roll?  How many ancillary income sources do you presently utilize? What can you add?

On an asset-by-asset basis do you know year-over-year and quarter-over-quarter rent growth and revenue growth? Naturally we focus on rents as that's the lion's share of revenue.  But let's consider the potential for all other sources.

What sources can you "add" to those already in place? We can always make room for an extra line on our report to account for additional sources of revenue right?  Once you have a few in mind for implementation consider performing a resident survey to validate your thinking.

Some added services require little or no capital investment.  Start with these. Think in terms of risk reward; calculate pay back and legal exposure (if any) into your decision-making.

Ancillary income can contribute significantly to cash flow as the majority of our sunk costs remain unchanged with addition of these revenue sources. This is no time to be shy nor rest on our rent growth projections!  While rent growth contributes to revenue, providing opportunities for ancillary income is a bounce to NOI just the same- often without a corresponding cash outlay.

Mr. Wilhoit is the author of two books: How To Read A Rent Roll: A Guide to Understanding Rental Income and Multifamily Insight Vol 1 - How to Acquire Wealth Through Buying the Right Multifamily Assets in the Right Markets.

For information on property management audio courses, books and our live weekly leadership academy, visit PowerHour Books and Courses website.

About This Blog:
Multifamily Insight is dedicated to assisting current and future multifamily property owners, operators and investors in executing specific tasks that allow multifamily assets to operate at their highest level of efficiency. We discuss real world issues in multifamily property management and acquisitions. This blog is intended to be informational only and does not provide legal, financial or accounting advice. Seek professional counsel. www.MultifamilyInsight.com

More Stories

Get The Newsletter

Get The Newsletter

The latest multifamily industry news delivered to your inbox.