Alternative Sources of Residential Cash Flow and Cash Value
January 26, 2010
An apartment complex or a single family home offers one primary source of income. However, for the smart investor, residential real estate can offer many more sources of income.
Some are obvious including:
- Corporate units,
- Washer dryer rentals,
- Pet Fees,
- Cleaning Fees,
- Application fees,
- Laundry Services,
- Storage,
- Etc.
Some are less obvious and can provide a much needed boost to marketing your residential rentals. A few of these could include:
- Furnishing features like flat screen televisions, lawn service, or maid service at a profit;
- Roommate lease plans; or
- Including cable and high speed Internet
These type packages are worth considerable attention today because with large percentages of prospective residents beginning their search for next rental home or apartment online seeking unusual search strings (the choice of terms a consumer puts in a search engine like Google) make the unusual services and amenities powerful differentiators. Thus, not only does potential revenue for the rental home rise, the potential market size is increased for the innovative owner or manager.
For owners with large numbers of units, other revenue streams become possible such as advertising to residents, subcontracted business services to residents and others.
When considering, alternative revenue the tax and asset value ramifications of each stream is important also.
For example, services like furnishings may offer depreciation. Or, products like storage may become rental income. In fact, in general including services as part of the rent is valuable for multifamily rental properties. A revenue stream that is rent based can increase asset value 10 to 15 times the impact to Net Operating Income depending on the market capitalization rates.
These ideas and concepts can be the basis for steady and significant increases in rental residential revenues, income, and cash flow for large and small owners alike. Investors can use this to improve and existing portfolio or as the basis to complete “value add” purchases successfully.
Blake Ratcliff
