Wash and Dry Another tried and true source of revenue is laundry facilities, whether they are in-unit washers and dryers available for monthly rental fees or common-area laundry facilities.
AIMCO, for example, capitalizes on its size and clout to put out “power bids” that bundle 30 or 40 communities together to obtain the most favorable arrangement for laundry facilities in common areas. The cut for building owners can be quite healthy. “Laundry varies from a low of 50 percent to highs of 75 percent to 80 percent” of gross revenue from the machines, which are owned, maintained, and managed by the outside vendor, AIMCO’s Baumann explains.
KSI Management currently provides washers and dryers in its top-of-the-line units as part of the monthly rent but will increasingly look to charge for that amenity in other classes of apartments. “In the next two years, we hope to be able to provide rental equipment in every unit that has washer/dryer hookups available,” Murray says, and KSI may charge about $50 per month for the service. That will, however, continue to exclude the company’s top-of-the-line units, where the laundry facilities will remain included in the overall package.
Water submetering is another opportunity. Julian LeCraw & Co., an Atlanta-based firm that manages 8,400 units, currently submeters the water at only a fraction of its properties—a statistic it wants to change. One of its 2005 objectives is to get most or all properties set up so tenants will foot the bill for their water usage, says Todd Jackovich, vice president, ancillary service.
The water recovery effort is part of a broader strategy at Julian LeCraw to significantly step up its ancillary income, Jackovich says. “In the last two years, we haven’t had anybody focused in this role. That’s [why] my position was created, to increase this revenue. Our biggest push is water and sewer billing.”
Similarly, Essex Property Trust, a West Coast REIT with nearly 22,000 units, is looking to what it calls “utility recovery.” The company is looking to recover its costs through one of two methods: submetering for actual water usage or billing based on an allocation method that factors in square footage of units and occupant count, explains Karen Erlandson, the company’s ancillary income manager.
Erlandson said a couple of factors drive the need for metering water usage: a broad-based water shortage and a need to manage the behavior of renters. “Conservation is definitely a big part of it,” she says. “I think it’s a national crisis—in California for sure—but we’re going to run out of water.” Rising costs are also acute, she notes. “It’s proven that when renters have to pay for water, they tend to conserve.”