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How High Fees and Deposits Could Be Hurting Your Revenue Growth

how high-fees-deposits-hurt-revenue-growth

Renters aren’t just making their moving decisions from base rent. They’re factoring in service fees, deposits, and recurring charges to determine the total cost of living at your properties. If they deem the cost too high for the area, your renters will go somewhere else

Owners and operators benefit from this perspective. By tracking fees and deposits of your competitors, you can make rent-setting optimizations that increase occupancy and maximize revenue across your holding, relative to market demand. 

But if you don’t, your fees and deposits could be higher than renter and market expectations and lead to…

  1. Extended vacancy periods. Prolonged vacancies lead to significant revenue losses from units and require offering concessions to attract new renters, reducing overall profitability and straining cash flow.
  2. High resident turnover. Frequent turnover decreases occupancy rates and demands higher marketing costs to secure new renters, leading to increased operational costs and instability. 
  3. Lower property appeal. Properties that lose their appeal to renters experience reduced demand, leasing to increased vacancy rates, and subsequent decline in rental income. 
  4. Regulatory scrutiny and legal challenges. Non-compliance with regulations can invite legal challenges and regulatory scrutiny. These issues can diminish resident satisfaction, lead to vacancies, and strain reputation and property efficiency. 
  5. Defaulted rent payments. Residents defaulting on rent disrupts cash flow and may lead to costly eviction proceedings. These processes result in legal costs and prolonged vacancy periods, impacting revenue.

Think as a Renter Would

Intended to maintain operational stability and increase profitability, excessively high fees and deposits can hurt your revenue growth, driving renters to other nearby properties with comparable services and amenities. 

Striking the right balance between occupancy and rental income is crucial. Renters are savvy–they’ll research to understand what the total cost of living will be before signing a lease. Advertising a low base rent but high-priced fees and deposits could equate to–or cost more–for a similar or higher property classification apartment. 

Understanding the total cost of living from a renter’s point of view can help you make informed decisions that positively affect revenue growth. ApartmentIQ provides an automatic and transparent solution for comp data, including public fees and deposits, so you can understand the impact these costs have on your properties’ performance. 

View pet fees/deposits, parking fees, utility fees, security deposits, and more to track the true apartment costs a renter sees using 100% publicly sourced data. Learn more about the platform →

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