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How To Increase Apartment Rental Income AND Have Your Residents Thank You

Niche-focused companies are offering the Internet as a revenue generating amenity for your residents in a brand new way. There is one company that allows you to have your cake, and eat it too. Think zero cost up front with a zero loss guarantee. Fiber Stream will design, install and launch Property-Wide Wi-Fi at zero cost up front for qualifying properties. Moreover, an agreement is required that once the profit margin is above the break-even point, the property would take over the revenue generating Internet system; hence the zero loss guarantee.

Through the course of one year, as new leases are signed, the entire property is converted to the new Internet plan. During this assimilation process, there is room in the budget for a 10% opt-out rate if you decide to offer this to those who do not use the Internet (do these people still exist?).

The residents are by no means forced to use the Internet; they are incentivized because they would be paying for their fair share of the amenity. The billing is most commonly done through a few different strategies: 1) Ratio Utility Billing System (RUBS) or 2) A Rental Rate Strategy.

RUBS Strategy

There are advantages to a RUBS strategy; first the Internet isn’t reflected in the rental amount, allowing for optimization of market rates. Second, the residents clearly see their share of the Internet cost; this allows them to see their savings when compared side by side to local offerings. Moreover, the leasing staff can use the cost savings as an added selling point.

One disadvantage of showing clear pricing is possible push-back from those who don’t use an Internet connection. However, a 10% opt-out rate is built into the program, so push-back is easily absorbed.

Rental Rate Strategy:

Including the Internet into the rent and creating a new stream of revenue can be as simple as raising the rental rates.

For example, Apartment A has a rent of $1,000, and the local providers offer Internet at $65 plus $8 for modem rental. Total for apartment A is $1,073. Apartment B offers an all-inclusive price that includes the rent and Internet for $1,050. Apartment B can be sold as the better deal because it is not only cheaper, but it offers a superior Internet connection not available to Apartment A. There are many advantages often missed when looking at this strategy. First, the residents don’t see the price, allowing the owner unlimited flexibility on how to profit from the amenity.

Often rental rates for a newly signed lease can easily be raised beyond the actual SRP of the Internet. Moreover, some owners may be tempted to simply offer free Internet within their marketing budget. The cost of free Internet is surprisingly inexpensive when compared to other marketing campaigns; residents will see a cost savings of nearly $75, while the cost to the property is well below half of that in most cases.

Another idea would be to exchange free rent with free Internet. This is a much cheaper option for the property yet may still provide just as much perceived value as a one month’s free rent concession. Additionally, may allow for your property to justify rent raises at time or renewal.

Further, a multiplier effect may be possible when coupling the Internet with new improvements and other value added amenities. For example a property plans to add stackable washer and dryers into every unit. Each resident who amends or signs a new lease will receive Internet and the washer and dryer. The perceived value of the bundle allows for owners to raise rents higher than they would have ordinarily been able.

A possible disadvantage to including Internet in the rent is that you must show the increased value to prospective residents. This can be challenging if you do not implement a marketing strategy. Make no mistake; residents want top of the line Internet, they will move out if they don’t have decent Internet. It’s safe to say they will move in to have premier Internet. A marketing strategy can be very simple. Consider something as basic as a placing a few property signs advertising; “Fiber Backed Wi-Fi Included in Your Rent” or “Gig Internet Included.” Odds are your occupancy rates and revenue will increase from this value added amenity.

Each property is unique and analyzing the right strategy for you is going to be based on your particular situation. Although I personally like the Rental Rate Strategy, it’s not always the best choice.

Before you get too excited about the possibilities of Internet as an amenity, it’s important to discuss best practices and what not to do. I can’t tell you how many property owners I have come across who have tried the proverbial “Wi-Fi deployment” for their property and it has failed. However, we are not talking about run-of-the-mill Wi-Fi. I agree if you offered that type of Wi-Fi, it’s a bad idea. It can be a costly mistake, and it can have a negative effect on both loyalty and retention. Fixing these failed systems is a lucrative business for us, but that’s an entirely different article we will discuss at a later time.

What Not to Do:

1) Don’t do it yourself. This is not a “Do-It-Yourself” kind of project. This is like brain surgery. Further, don’t have your IT department think because they have a certificate in networking that they can pull this off. That’s like having your chiropractor perform your brain surgery, bad idea.

2) Don’t hire your local or regional ISP. Your local cable or telephone companies do not offer a solution that will allow you to sell the amenity AND have your residents’ thank you. I am sure you all know that most local ISP’s have the worst reviews in the country. The industry as a whole is pretty scary, here is one reason.

3) Don’t go cheap. In the world of Wi-Fi, there are many cheap options. I promise you; they won’t allow for superior Internet. Your amenity will inspire no one and chances are your residents would prefer to just “Handle it on their own”. If you go cheap you will have a mutiny on your hands.

What to Do - Best Practices.

1) Hire a Full Service Internet Provider (FSIP): There are many companies that will do the work, but that doesn’t cut it, because most are simply network engineers. Look for a niche focused Internet provider who specializes in apartment Internet networks. You are looking for someone who caters to apartments as their primary focus. Make sure a solution is designed specifically for apartments and that they are a FSIP.

2) Go big or go home: The service must be better and superior to what your residents are accustomed to receiving. This means you need to install the best network possible and it better be superior to the local offerings or you’re wasting your time.

3) Pass the savings on: The service should be cheaper than what your residents already have. Further, ensure the FSIP offers a TV solution that allows for easy unbundling of their cable portion. The total cost of services should be less expensive than the local offerings.

4) Get permission: Always include your residents, explaining that superior Internet is your commitment and that you are looking out for their best interests. When it’s time to raise the rents or add it to the RUBS, they will not be surprised; in fact, they will be ready to thank you.

5) Test-drive it: If you pick the right FSIP, they will guarantee their work. In addition, during the assimilation process, residents who are skeptical can try it long before they pay for it. If you followed #2, your residents will be delighted, happy and will thank you.

6) Assimilate: As new leases are signed, simply implement your billing strategy. If you marketed your amenity, the residents will be expecting it, so now they can move in, log on, and go.

In Conclusion: Internet as an amenity is an awesome idea if done right; doing it yourself can be catastrophic. With superior Internet you will set your property apart from the competition. There are many ways to implement this and there are programs that allow for zero cost up front and for a zero loss guarantee. Picking the best strategy that will maximize your revenue per door and property value is important; no matter how you slice it, residents will love amazing Internet. They will thank you, with increased satisfaction, loyalty and retention. From time to time you may even get a nice letter.

Fiber Stream is a provider of futuristic high speed Internet and TV services. Fiber Stream’s target markets include Apartments, HOA'S, MDU's, and Senior Living Communities. Headquartered in Phoenix, Arizona, Fiber Stream is a nationwide "Full Service Internet Provider”, offering Fiber to the Unit (FTTU), Property-Wide Wi-Fi, Gigabit Internet and Managed Wi-Fi solutions. Fiber Stream developed one of the first Revenue Generating Internet Systems of its kind. You now have a Personal Network Operator (PNO) to guide you through the perils of Internet ownership, “You-Own-It, We-Operate-It©. For more information, visit or call 1-888-644-9434.

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