What is the biggest source of revenue in a multifamily property? Rent, of course. But there are also a lot of opportunities for additional revenue in most multifamily properties landlords may not consider. Here are some nontraditional techniques that might help you drive additional revenue into your investment.
Extra Dollars In Your Parking Lot: Your parking lot might be fully leased out, but are the parking spaces always occupied, especially during the day when people are working? There are several companies out there trying to get into “Airbnb for parking.” These companies will put their sophisticated software and smartphone apps into place at no cost to the landlord, then profit-share the additional revenue they generate. My favorite company for apartment properties is ParqEx, and SpotHero and Parkwhiz are gaining industry ground too.
Master Leasing For Short-Term Rentals: Landlords and even representatives of whole cities have been vocal about their distaste for Airbnb. In Chicago, hosts must register with the city to have a lawful listing. Many landlords have noted that renting out an apartment on Airbnb and other services violates the renter’s lease and is against policy. Now, companies are starting to act as intermediaries — they will master lease one or more units in a property, handle all the registration and licensing and run an Airbnb-type operation from the building. The landlord benefits because many times the company can pay higher rents than market rates or have a profit-sharing agreement where the landlord can make 10–40% more than a traditional lease over the course of a year. My favorite new company doing this is Reserve Rental, and others like Guesty and AirConcierge may meet landlords’ needs too.
Outsourcing Amenities: Aside from offering residents amenities that cost you money, such as a pool, fitness center or lounge, owners can contract with companies to add amenities to their existing package. Sometimes you benefit directly, other times you can simply charge a higher rent because you have an amenity that gives you a competitive advantage. An example? On-site dry cleaning. One company, Pressbox, puts lockers in your building; residents can drop off their laundry and dry cleaning and pick it up in the building, and it’s all handled through an app. Similar concepts have been realized with package lockers such as Amazon and Luxer One.
Co-Living: As affordability becomes a bigger and bigger problem in major cities, co-living becomes an interesting concept. While renters enjoy cheaper rent, the landlord also enjoys a higher price-per-square-foot. For example, a market rate three-bedroom unit can actually charge more if each bedroom were rented out individually than if the unit were just rented as a three-bedroom. In a recent Forbes article, different business models for co-living were discussed. The most avant-garde companies doing this don’t actually own the building, but function much like a hotel operation, master-leasing the entire building from the landlord in a joint-venture-type structure. My favorite new company doing this is Common, and WeWork has emerged onto the scene with WeLive.
Using Machine Learning And AI For Optimal Pricing: When was the last time you investigated your pricing strategy? Sometimes additional revenue is not only about raising your rent to the right level but actually lowering it to the right level to reduce your vacancy carry. You might be considering an upgrade to a unit (i.e., new cabinets, appliances, roof deck, etc.) but you just can’t determine exactly how much extra rent you can get. Forever, we’ve had to rely on our own experience or intuition — or whatever we can get our competitors to tell us. New companies are emerging and using data analytics and machine learning to predict all of this and will show you exactly how they do it. My favorite is Enodo. Its data science team is light-years beyond anyone else I have identified (full disclosure — that’s why I invested in this startup), and others like HouseCanary are making similar market moves.
Hopefully, these five ideas help you increase your multifamily properties revenue. The cost of these services is nominal and can add to your overall revenue. It’s almost like finding change under the couch cushions.