There are a generous number of other income items you can account for in an apartment budget. Other income also known as ancillary income is an opportunity to add value in the way of services that are above and beyond rent monies. From application fees to cable income to utility recovery, the chances to collect additional revenues are plentiful.
Application Fees
Application fees are typically charged per applicant and or one fee per married couple. More times than not it is determined by comparing and contrasting rates charged by comps in your respective markets. In my experience, I have seen these rates range from $30 to $50 per application. The fee is collected to offset the cost of doing credit and criminal background checks. And, it is collected at the time the application is submitted for processing. The fee is typically non-refundable but is sometimes waived if the application is approved with no conditions. In the latter case, it is considered a marketing cost and or a cost of doing business.
Analysis of Application Fees
You can discern some down and dirty information using the application fee amount in a given month. You can take the total application fees collected in a given month and divide it by the amount charged for an application and compare that number to the number of leases taken and or number of move ins for the month. It’s a back of the napkin way of making sure you have collected a fee for every lease or every move in. Any margin of error should show up in a concession or other concession line item.
Application Fees – Money Orders
There is a downside to collecting application fees. Over the years, I have seen it more times than I would like to admit. On-site team members take blank money orders, fill them out in their own names and cash them. They attempt to get away with it by writing the amount off to a concession or other concession. Just something to be aware of.
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