Ancillary Services are Adding to NOI via Multifamily Executive Magazine

A delicate balance exists for multifamily companies when determining a pricing structure for ancillary services. That balance basically straddles the line between leaving money on the table by pricing too low and driving tenants away by hiking rates too high. Although substantial differences won’t always be seen from a small increase here and a slight reduction there, additional revenue derived from smart ancillary pricing can have a meaningful impact when spread across an entire portfolio of properties.

“Simply having an ancillary service in place does not guarantee success,” says Gardner Rees, executive vice president of ancillary services at Dallas-based Riverstone Residential Group. “But a strategically implemented and managed ancillary service may have a major impact and continue to drive higher NOI.”

Among the things Riverstone is capitalizing on is technology. Rees cites online leasing and online renter’s insurance signup for their use of paperless systems, esignatures, storage and retrieval as a way to keep service prices lower by reducing administrative manpower. “The adoption of technology helps tremendously, as most of the newer services are far less labor intensive and thus can be provided to our clients at a lower cost,” said Rees. Riverstone has also seen positive NOI at the properties for their clients, thanks to its introduction of a telecommunications group implementing a program which can add $150 to $250 per unit annually in revenue.

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