Since 2010, multifamily-type housing construction has grown dramatically, which greatly increased renters’ living options. With more units available, the rental market has become increasingly more competitive and property managers and landlords must work harder than ever to make their apartments more appealing to residents.
Consider the following tips when thinking about offering incentives to finding and retaining tenants:
1. Understand that monetary rewards generally triumph all other types of rewards.
The most desired reward for tenants is those that provide them with free cash or a discount off rent or security deposits. While this is generally the most costly incentive option, it can be the most effective one, and may be one that property managers and landlords should consider during the slow renting months. Since this is a one-time incentive, it may be worth the cost. (One tip we have is to not reduce the amount from security deposits.)
2. Properly time the offering of the incentive
Offer the incentive late in the discussions with potential tenants, and one-to-two months before current tenants’ leases expire. Property managers and landlords should gauge the level of interest from potential and existing tenants before throwing out incentives.
3. Unit upgrades are a great alternative to monetary-type incentives
With good contractor relations or requests for multiple unit-upgrades at discounted rates, these types of incentives can be cheaper than offering monetary-type incentives. Unit-upgrades can include new flooring, replacing kitchen appliances, repainting walls, or installing washer-dryer units.
4. Consider services as incentives which can make tenants’ lives easier and cheaper.
If neither monetary or unit-upgrades are incentives for you, service incentives could work for you. A few ideas for service incentives include unit-inclusive TV/cable, internet which has already been set up, or free laundry services.
5. Avoid negotiating different incentives with different tenants
By law, property managers and landlords need to have the same screening policy applied to all applicants and tenants; otherwise, you may be violating equal-housing discrimination laws. By the same logic, incentives should be applied for all types of tenants.
6. When possible, avoid incentives which require alterations to the lease.
Having one-time incentives will save property managers and landlords the headache or revisiting drafted or existing leases. Reoccurring incentives usually also incur more cost, so the easiest and most cost-effective option will be avoid incentives that require alterations to the lease.
7. Finally, set your boundaries and decide your bottom line before offering incentives
Gather all the necessary information you need to, crunch the numbers, and carefully consider your bottom line and stick to it. This will make choosing which incentives you’re willing to offer a lot easier, and can also prevent you from having discriminatory screening processes.