I’m Using Ancillary Income to Cover 63% of My Mortgage: Here’s How


If you caught BP Podcast 008, you heard me declare I was planning to pay for my eight unit apartment’s mortgage without using my tenants’ rent. I had no clue how I was going to do it, but I started moving in that direction.

Let me update you on how it’s going.

How I Bought, Rehabbed, Rented, Refinanced, and Repeated for 14 Rental Properties

This is the dream right? Going from zero to 10+ rental properties, providing stable cash flow and long-term wealth for you and your family, and building a scalable business model to boot! Learn how this investor did just that, in this exclusive story featured on BiggerPockets!

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My 5 Tactics for Additional Income

The pursuit has led me to some winning and losing ideas. I lost over $3,000 in a failed plan to broadcast wifi to my neighbors… but I’ve made much more trying to:

Provide Corporate Housing

If you’ve followed my story, you know I’ve been working for years to revitalize my neighborhood. Many have considered my actions to be “nice,” but dismissed the business acumen behind civil leadership. The neighborhood has recovered to the point where the Regents of the University of California rent an apartment from me. I rent them a fully furnished apartment with utilities in a typical corporate housing arrangement.

Related: 4 Side Income Streams to Sustain You As You Pursue Real Estate Full Time

Rent Rooms to Peers

One thing Airbnb has taught me is that people are willing to share living quarters with stranger for a period of time, as long as that stranger is vetted. This is a very profitable concept to grasp.

During a moment of clarity, I realized I could rent a furnished bedroom — shared bathroom and kitchen — to a medical student who needed short term housing at the same rate I charged for an unfurnished apartment unit. They felt comfortable sharing with their peers.

This is how I doubled the income for one of my units.

(Some of you may not consider this to be ancillary income, but I’ll keep taking the extra money to the bank.)

Rent Furniture

I have two private apartment units where I provide furnishing and utilities for international doctors. They stay for three to six months at a time and only want one payment. Now that the furniture has been paid for, the additional revenue is ancillary income.

Rent Bicycles

I’ve created a niche by providing a transportation solution for my short term clients. I’m moving towards renting electric cars, as I once forecasted, but I rent well-maintained bicycles for now. I rent four bikes at varying amounts per month. The highest bike rental is $40 per month.

Clients who haven’t ridden for years are apprehensive at first, but on the second or third day, they are smiling ear to ear. Using bicycles to make the one mile commute solves transportation and parking issues.

Coordinate Maid Service

Housekeeping during turnover is part of my corporate housing offering. A new corporate guest arrives the day after one departs, so cleaning and coordination is important. I’m able to charge more for this service than it costs me.

I’m Now 63% More Profitable

I’ll let the numbers tell the story of why I bother with ancillary income.

Method – Income Category Net Ancillary Income
Room Rent – Hospitality $625
Furniture Rental – Hospitality $270
Bicycle Rental – Transportation $80
Housekeeping – Hospitality $55

My mortgage is $1,628 per month. My income above fully occupied, prevailing market rents is $1,030.

Therefore, my ancillary activities account for 63% of my debt coverage. I’m 63% more profitable than the Betamax Landlord down the street with my exact apartment.

How I’ll Get to 100% Coverage

I don’t consider myself successful yet. I haven’t reached my goal of covering 100% of my mortgage with ancillary income. However, I now have a plan to get there. Within the next couple of years I will:

  1. Convert another 2 bedroom unit into a shared unit. Once the current tenant moves, I’ll covert it into another shared unit and collect another $625 per month.
  2. Cultivate non-tenant income streams. My property has the potential to operate one part-time storage unit, grow drought tolerant plants for a local landscape businesses, and rent a car to tenants and non-tenants alike. I’ll report back on the success of those experiments.
  3. Expand corporate housing opportunities. It’s not terribly innovative, but now that we have success with corporate housing, it’s much easier to parlay it into more opportunities. I’m currently placing our small snowball on top of a large hill.

Do you think I’ll make it to 100% coverage?

Quick Start Guide to Ancillary Income

I’m sharing my story to let you know it is possible to cover your mortgage with ancillary income. Whether you have a single family or multifamily rental, you have a world of opportunities waiting on you.

Related: How To Use Vacation Rental Sites To Make Money Off Residential Income Properties

You need not struggle like I did. Use this four-step plan to get you going:

  1. Pick a category to brainstorm. A non-inclusive list of categories includes: Transportation, Health & Fitness, Storage, Hospitality, Commerce, Electricity, Advertisement, Broadcasting, Fees & Commissions, Vending & Commerce, Financing, Land Use. Think about one category per day for 12 days and you’ll have a nice list of ideas.
  2. Test one idea for viability. Not all my ideas have been winners. Try a bench-scale venture and get feedback. If you’re a math nerd, you might try your hand at using a Monte Carlo Simulation to give you a more accurate projection of your success. No matter what, it ultimately will take a bit of faith to develop a significant profit center — but please start small. 
  3. Operate your venture for a year to gain experience. I’ve been operating my shared peer housing for almost a year. Each month I learn more about my client’s needs and discover profit centers that were previously obscured. All too often we landlords hurdle over our endowments as we run after the next deal. Take it from an entrepreneurial junkie; think deeply about optimizing your existing investment BEFORE you borrow tens of thousands hoping to net an additional $100 per month.
  4. Continue to layer on profit centers. You love your smartphone because it has a lot of useful functions, right? One device solves many problems. Grow your rental’s value the same way. Let it be the solution to as many of your client’s problems as possible.

Tap Your Property’s Endowments

What is your property endowed with? Is it in close proximity to a business, like mine is? What’s your advantage?

Leave a comment and let me know how many ancillary income ideas might work for you.

About Author

Al Williamson

Al Williamson helps landlords increase their monthly income by sharing unique tips to save money. He is the author of Airbnb for Landlords, and he blogs at LeadingLandlord.com and is an active BP member.


    • Al Williamson

      You’re so correct about shopping with ancillary ideas in mind. Good point. I’m currently chasing an apartment building that I would not considered if I was going to operate the in a Betamax manner.

      I’m moving forward because I know I can jazz it up

    • Al Williamson

      I ran some numbers for Seth’s RETipster’s blog and determined that corporate housing was the most lucrative way to operate a 3 bd 2 ba .

      Corporate housing is a winning because you’re benchmarking off hotel rates for intended stays and not another residential rental.

      Dig into it.

  1. Al, you are truly an entrepreneur taking the new reality and making money with it!

    Really like where you took the Airbnb concept, analyzed it and adjusted it to suit your own financial goals…brilliant! Corporate housing, renting bicycles, etc.. People often forget the resources at their disposal that could fulfill a need and as a result, generate additional income with it. You investigate needs and then supply solutions with positive outcomes for everyone involved. Outstanding!

  2. Scott Trench

    One of the points that you brought up was that you are attempting to revitalize your neighborhood. This comment is a little ancillary (see what I did there) to the main point of this article, but I really love that perspective.

    I invest and live in what folks like to describe as an “up and coming” neighborhood. I think that it is absolutely my responsibility to better the community, and not just for my own profit. I likely haven’t had and may not be capable of having as large an impact as you have Al, but I’m starting small by working with a local group to bring a healthy grocery store to the neighborhood, and by working with the local schools to offer some after hours programs.

    Improving the lives of the people around you brings more happiness, well-being and long-term success than anything else. From the business standpoint, it also helps you to really get to know your market, meet local leaders, and spot more opportunities to build great businesses and great neighborhood. I have a ton of respect for what you are doing Al. Thanks for sharing.

  3. Al Williamson

    Amen Scott! I’m not able to add to what you eloquently stated.

    Yep, you busted me … I slid in “neighborhood revitalization” because I’ve been writing about it on BP for years. There are best practices in place. Neighborhood revitalization is a serious business strategy that should not be dismissed.

    Thank you for your civic leadership in your neighborhood. Enjoy the meaningful wealth you’re creating.

  4. Great post, I look forward to hearing more ideas on how to maximize rental income! You stated at the beginning that you lost $3,000 in an attempt to broadcast wifi to your neighbors- have you posted about this failed attempt anywhere? I would love to hear about this- I have some experience in this area and would love to read about what factors lead to the failure.

    • Al Williamson

      Landscape interference! That’s what lead to my failure.
      Now that I’m dealing with PhD types, bandwidth is a big issue. I solve it by having three access point in my 8 unit building. I pair people up so there’s not too many on one signal.

      Works great. Everyone can Skype at the same time.

      Funny, seems like everyone has two or three WiFi enabled devices. Big and growing demand for bandwidth.

      One of my catch phrases goes: Hot Wi-Fi for Cool Doctors

  5. Rosy Zide

    I loved reading this article! I really appreciate that you are both very creative and consciously working to make a positive impact, all while intelligently investing and making a good living. These are my goals. This article was inspiring and practical at the same time. Thanks for the great article!

  6. Joel Owens

    Extra savings is great. The two main factors are the time and extra work it takes to implement such measures.

    If you have extra savings but have to put in tons of hours and wait years to see the plan really take effect then you are having to push hard for yield.

    The question then becomes is the investor further along in 3 years growing multiple properties with equity growth by 80% or to keep refining one property until it hits metrics of 90 to 95%??

    I think engineers just like doing this to an extreme. Nothing wrong with that at all but the common investor is happy to get savings but not at the exhaustion of time for XX number of extra percent. It’s just all relative to you income level and business and what you have time for. It is interesting to read for sure……….. : )

  7. Al Williamson

    Joel, as always, I like your take on things. That’s for commenting.

    Acquisition and Optimization are like two pedals on a bicycle. They both are needed to move you forward efficiently and effectively.

    Seems like people struggle with optimization. After all It is very difficult to look at your property with creative eyes. I hope the process I outlined makes the process easier. I know we can agree on that.

    It would be interesting to hear your take on my future mini storage addition to my residential commercial building. The income from the containers rental would be backed by lease agreements and (after 3 years according to your illustration) exponentially improve my equity.

    There are significant, hassle free ancillary income options out there. Possibly, a hybrid approach, acquisition + optimization, is best.

  8. Tony Brown

    Bravo Al! Like many other posters here, I love the idea of optimizing the properties you already have before pursuing additional properties. Thank you for providing a simple optimization plan and encouraging folks to put some real thought into what may work best in their individual situations. Simple, effective, efficient. Pure genius!

  9. Kathleen Hendricks

    Thank you Al for this thought provoking and practical approach to deriving additional income on existing properties. Certainly thinking outside of the box. I own a small multi-residential and manage a commercial office property and now my thoughts are spinning.

  10. Siraj Ahmed

    Thanks for an awesome, informational post Al! The best piece of advice for me was: “Optimize your own investments before incurring more debt on another investment.”

    I have a studio that I will be closing on in a month that I would like to convert into a Corporate Housing apartment but I do not think it can be shared as it is a studio, it would be too small. I do not mind doing the short-term lease to the doctors as there is an excellent hospital near there (about 8 min drive). What advice can you offer?

    The condo is in a building of 30 units, i would like to have it furnished to get 3-6 month leases to be able to charge a bit higher rent and collect more vs doing regular one year leases. Is there a specific process that i need to go through to convert my condo into Corporate Housing? How do you advertise at the hospitals to get these sorts of tenants? Would you be able to share pictures from these types of units so i can get an idea of what they look like?

    If you like me to send you an email, I can do that as well! thanks!

  11. Wow,
    sometimes I was pretty sure that some of my tenants were making more off my rentals than I was by implementing some of these very same strategies. It wasn’t until I jammed up a while back and really needed to bring in some cash that I rented rooms as they got finished. When my tenants opened their boarding house I wasn’t privy to the details. I did however learn from their example and have employed similar methods in some houses that have repeatedly overstepped their agreements. If they are managing their affairs and the rent is getting paid we’re cool. If however police calls or neighbor complaints occur and I have to babysit then we need to make sure all residents are on the contract.
    There is a huge part of the population that all they really want is a safe place to rest and sleep, a private kitchen and private bath is not necessary for the quality of their life to be improved. My area has rows of rental buildings that now do quad living, if dorm living works for you, they are comfortable, and the outright homeless numbers seem to support the concept. No worries to the single family homes, those rents are keeping pace and apartments as well.

    • Al Williamson

      Gary O, yes you are using the same formula – just on the lower end. People will collaborate with their peers.

      PhDs will share with doctors. CEOs will share with other CEOs. High tech workers will bunk with other dot-commers.

      Low/no income earners will share with others like themselves.

      Grasping this concept opens many income opportunities for landlords.

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