The best apartment rental incentives are those that attract tenants (without hurting your bottom line). It may take trial and error to get it right. Some renters may not be attracted to a waived security deposit, but they might be interested in flexible rental terms. Every community, and every tenant, is different.
Let’s explore the incentives that property managers can use to attract tenants. At the end of the article, we will also discuss three rental incentives that don’t work and explain why.
1. Resident Referral Program
The first apartment rental incentive on our list is actually more of a perk for current renters. The incentive could be reduced rent or even a free month’s rent. A Resident Referral Program is a great way to build a stronger, more cohesive community. After all, residents will be “paid” to live closer to friends or family. If you have a program like this, make sure your internal communications promote it repeatedly.
And don’t forget: happy tenants are more likely to provide referrals, and they’re more likely to leave. positive reviews of the establishment.
2. Offer a free month’s rent
Some property management companies offer rental incentives that make a big difference for budget-conscious renters. There’s probably no better way to grab someone’s attention than a month’s free rent. (Some properties go up to six weeks!)
Getting around is expensive, especially for long-distance or out-of-state renters. Between moving costs, first/last month’s rent, and security deposits, a special move could be just the boost a prospect needs to consider renting from you.
3. Reduce the security deposit
A security deposit is a safety net for you and your landlords. It may not be possible to eliminate it, but you may be able to reduce it. This can be done at all levels or only for certain tenants with high credit scores, good rental history, etc. If you are a property manager who collects first and last month’s rent in addition to a security deposit, you may be able to facilitate one or more of these requirements. It’s an easy way to make your property more attractive to prospects.
4. Offer longer rental terms
A month’s free rent can have a negative impact on your monthly reports. It might be easier on your bottom line if you offer reduced rent on a lease. This spreads your free monthly incentive over the duration of a 12 month lease. The upside is that you don’t have a big hole in your income for the month, and tenants still get a great rental incentive.
As another option, you can offer discounts for longer leases (18 months or more). This guarantees less turnover and offers a special incentive for long-term residents.
5. Offer shorter rental terms
There are times when a little creativity will fill your property faster. Students and seasonal workers might seek shorter leases, on the order of six to nine months. With a shorter lease, short-term residents don’t have to stay where it no longer makes sense for them to live. They will save money on rent because they will have the freedom to leave early, without penalty.
6. Waive pet deposits (only applies to pet-friendly properties)
According to 2022 NMHC Tenant Preference Survey Report, 51% of respondents prefer pet-friendly apartments. So in addition to make your pet policy easy to find online, consider making your properties even more pet-friendly. If your prospects with pets are considering your property and a comparable property in the area, they’ll be more likely to choose one that waives (or reduces) the pet deposit.
7. Offer the amenities your community wants
There are many ways to create value without offering free or reduced rent. NMHC’s 2022 Survey of Renter Preferences Reveals Top Amenities According to Renters. To get you thinking, check out the list of 10 tenant favorite features and amenities, starting with the most sought after:
- Washer and dryer in the unit
- Air conditioner
- Soundproof walls
- High Speed Internet Access
- Garbage disposal
- Dressing room
- Blinds/blinds pre-installed
- Complete patio or balcony
Don’t just go through this list. Your apartment community’s preferences are likely different from the national average. At your next tenant satisfaction survey, ask your residents to rank the amenities listed above. Add a few that make sense for your property. This will tell you what people like to live there as well as what may be missing.
BEWARE OF TRENDS
The popularity of certain amenities may wax and wane. For example, “best modular closet systems” saw the biggest year-over-year increase. In 2020, this feature only attracted 56% of tenants surveyed. In 2022, this figure has increased to 72%. That’s a difference of 16 points! It’s also a sign that people are looking for more customizable storage – a good thing to know when looking to add gear.
8. Gym memberships, grocery deliveries, etc.
If it’s not in your budget or floor plan to add a gym — but your tenants want one — you might be able to make a compromise by subsidizing their gym memberships. . See if you can partner with a local gym for a free or discounted membership. You may be able to do the same with a grocery delivery service such as DoorDash or Uber Eats.
Just keep in mind that a membership is nice, but it’s not the most powerful incentive for renting an apartment. There is no comparison to free or reduced rent. That said, this is a budget-conscious incentive that could help attract more renters to your community.
Incentives for renting apartments that don’t work
Now that we’ve looked at the best rental incentives, let’s look at some of the worst. These three “incentives” all lack credibility because they do not really save the tenant real silver. (Aka don’t nickel your community when it comes to rental incentives.)
1. GIFT CARDS
While that sounds like a nice part of a move-in package, a gift card to a local store or restaurant isn’t much of an incentive to rent. Residents are looking to save hundreds of dollars or more (depending on rent in your area). A coffee break or restaurant experience doesn’t even come close.
2. PROPERTY IMPROVEMENTS
The reason we include this here is that property improvements are an integral part of the market rental price. You won’t necessarily be able to raise the rent just because you’re installing new appliances. If the fixtures are old and need replacing, you’re just doing what you need to do to stay competitive, attract leads, and retain resident loyalty. Of course, if you’re really going beyond luxury amenities and appliances, you might be right to treat those upgrades as rental incentives.
3. GIFT BASKETS & WELCOME PACKAGES
It’s nice of you to provide a welcome package or gift basket to new residents. Such a package may include snacks, replacement household items like light bulbs, a guide to local restaurants and activities, gift cards, etc. And don’t forget a handwritten welcome letter!
However, while a welcome package can help your new tenant feel more comfortable and start your relationship off on the right foot, it doesn’t make sense to offer one as an incentive to rent an apartment. . Imagine what a “free gift basket for new leases” would look like on a billboard! Not too impressive.
Counterpoint: Not everyone believes in apartment rental incentives
If an incentive results in higher retention and shorter vacancies, you will benefit in the long run from any short-term discount. Yet the incentives are as controversial as they are popular. Not everyone thinks this is good business practice. Some people think that incentives devalue your brand and your image.
On the other hand, the right rental incentive is eye-catching and can keep your brand top of mind for future tenants. If your properties are overpriced by a local competitor, you may not be able to lower the rent, but you can attract leads with something else.
If nothing else, an incentive can get people talking to you. This means leads that you might have missed without prompting.