Ancillary Services: A Multifamily Growth Strategy
How ancillary services drive growth and profitability for multifamily owners while enhancing tenant satisfaction.
The multifamily building owners are seeing a downfall in the market as the economy has frozen, and rent price growth has halted or is very slow. To tackle this problem, most multifamily building owners are turning their heads towards providing ancillary services to generate more revenue through new means.
Even with the halt of the rental amount growth it’s getting hard for the multifamily owners to manage expenses particularly the price of labor which continues to rise to this date. This has left property owners finding ways to manage expenses by turning toward ancillary income sources.
Download our report about the most popular ancillary services among the renter's 2024 Top Ancillary Drivers Report.
The main issue with ancillary services is the hesitation among multifamily owners to charge their renters as it might lead to a backlash and resentment from them. But as per our own survey conducted among 500,000 people across the nation, they prefer getting services which can make their life easy. Services like cleaning, handyman, chores, food/grocery delivery, and many more. These services create a sense of belonging in the community among the renters which leads to better tenant retention, lower vacancy rates, and long-term relations between owners and renters.
The benefits of these additional ancillary services are well received and perceived as the best value for money as they grow to enjoy these services.
Amenify, conducted a nationwide survey among 500,000 residents in multifamily communities, asking them to complete the statement: “I would pay for my building to _______.” The overwhelming response was, “Improve our Wi-Fi.”
In the busy life of today's world, we are shifting more and more towards the digital age and it has become nonnegotiable as people are always active on the internet, so the demand for fast and stable WIFI has increased over the years making it one of the most important and basic necessities for renters in their apartment. Since the pandemic, the work culture has also shifted from full work in the office to mostly hybrid or completely remote, increasing the need for a stable home WIFI.
Other key requests included streamlined package delivery solutions, enhanced work-from-home amenities, and support with household tasks such as cleaning, maintenance, and daily chores.
Lifestyle services like personal training, pet care, and housekeeping also emerged as priorities, emphasizing their impact on resident satisfaction. While residents currently seek these conveniences from external providers, few property operators have recognized the opportunity to integrate these services as part of an in-house experience. By addressing these needs proactively, operators can foster a more supportive and enriched living environment, turning their properties into true extensions of homes.
In today's rental market, charging for services beyond base rent is no longer an exception or unethical; it's the industry standard. Data from over 3.5 million multifamily units in which Amenify provides services reveals that nearly 65% of operators now implement additional fees for services. These ancillary charges may take the form of move-in fees, monthly service fees, one-time charges, or per-use fees.
For property managers, these services are more than revenue opportunities; they're differentiators. When presented with two comparable units, renters are often drawn to features that resonate with their lifestyle or values. Sustainable and luxury services, in particular, improve the appeal of a property.
At Amenify, we help properties introduce these sought-after services, improving tenant satisfaction and driving operational success. Our approach ensures that the services offered not only align with residents' needs but also foster a sense of connection and care, making your property a preferred choice in the market.
Ancillary services have become a critical part of enhancing the resident experience while unlocking new revenue opportunities for property owners. Surprisingly, many landlords undervalue these services, often charging below the market potential. Take Laundry service, for example—while the average per load charge is $2-$4, prices range from $1.5 to $3 per pound of laundry. By offering laundry service in the building and justifying a higher price point through strategic investment, property owners can achieve significant returns. For instance, a 500-unit property could generate around $12,000 per month in additional revenue—investments in higher-quality service often pay for themselves quickly.
One of the most strategic advantages of ancillary services is their flexibility. Unlike rent, these services allow for testing and iteration. By experimenting with different bundles and price points on smaller resident groups, multifamily operators can refine their offerings before rolling them out across their entire portfolio.
Market preferences and price sensitivities differ widely, and consistent testing can identify the optimal balance of value and cost. This data-driven approach not only de-risks large-scale implementations but also informs the design of future offerings, ensuring services are tailored to residents’ needs.
Despite a slowdown in rent growth and rising costs, multifamily properties can maintain and even improve profitability by leveraging ancillary services. These offerings enrich the resident experience while establishing new revenue streams that are both sustainable and scalable.
As the market evolves, those who provide innovative and thoughtful services will not only meet but exceed resident expectations. At Amenify, we see this as an opportunity to empower building owners and operators with tailored solutions that create meaningful value for both residents and their portfolios.
FAQs
-
Ancillary services are supplementary offerings provided alongside a core product or service to enhance the overall experience, such as WiFi or cleaning services in rental properties.
-
The most common ancillary service in multifamily properties is internet and cable services, often bundled for convenience.
-
An example of an ancillary system is a property-wide smart home platform that integrates utilities, security, and entertainment services.
