Creating ancillary income can be a slippery slope. You can produce extra revenue by assessing fees to your residents, but you have to walk a fine line to avoid alienating them with fees they might interpret as frivolous.

Residents understand that they’ll probably have to pay pet rent, a fee for extra storage or a little extra for a covered parking spot. But, they don’t want to feel nickel and dimed with extraneous fees they believe should be part of the rent.

Apartment operators take vastly different approaches with regard to producing ancillary income through fees, and philosophies often differ by size and class of the community. However, a study of 2.6 million apartment units, Entrata found that ancillary revenue accounts for approximately 4.5 percent of total scheduled monthly charges with application fees, administration fees, parking charges, pet rent and security deposits rounding out the top five sources of the income.

What can you do to determine the right strategy for your company? A panel of experts at the 2017 Entrata Summit explained how to leverage your property management software to find opportunities for positive ancillary revenue while avoiding negative fees that can damage your resident base.

Entrata’s study discovered only around half of communities take advantage of their automatic ability to post late fees to resident accounts and the setting that requires a renter to pay their balance in full each month. They are ways to reclaim those snippets of extra revenue that aren’t blatant fees put in the faces of your residents.

As with any program being implemented at your property, understanding your resident demographic is of the utmost importance when forming your ancillary strategy.

Mill Creek Residential has different ancillary income strategies for each of its brands – Modera, which is more upscale and attracts renters by choice; and Alister, which consists of renters by necessity.

The student operator Pierce Education Properties has found smart home technology amenities to be particularly attractive for its portfolio of properties catering to the tech savvy millennials and Generation Z.

Gunti Weissenberger, president and CEO of The Westover Companies, said his company had to reassess its value-add strategy after gauging resident reactions to new fitness centers and clubhouses. They found residents were no longer willing to pay for them so they combined the fees into an overall amenity package.

In 2016, the National Apartment Association published a guide outlining the amenities that provide the most value based on a study of more than 100,000 units in 35 states. Not surprisingly, pet-friendly amenities rounded out the top five and ranged from pet-washing stations to dog parks.

Deciding on pricing for amenities, fees and extemporaneous charges is a delicate balancing act; one that requires a carefully optimized strategy. For more information on how to improve upon your strategy with the tools available in Entrata, please contact your customer service manager or sales representative.