These days, more consumers are opting to rent rather than buy, which is why multi-family construction is booming. Because there are more multi-family buildings in communities, renters have more options when it comes time to renew or find a new place. Property managers need to make their property appealing enough to keep their current tenants, because retaining current tenants is much more cost-effective than finding new ones.
There are certain incentives a property manager can offer that are more attractive to tenants than others. It is important to use these incentives at the right time, because even the best incentives can go unnoticed when tenants are already looking for a new place to live.
When to Offer Incentives
There are two key times you can offer an incentive that keeps tenants interested in staying long-term. The first is offering it right when a tenant signs their lease. You can let them know that if they renew later down the road, they will receive a particular incentive. The second time is offering incentives right before a tenant’s lease expires. Try to offer it just a month or two before the lease expires. Offering it too early could result in the tenant forgetting about the incentive.
What Is the Best Incentive?
Financial incentives offer the biggest motivation to current tenants. A recent study has shown that 52 percent of tenants are more swayed by cash or rewards they can spend. Most tenants prefer a discount on their rent for staying another lease term. In fact, 58 percent of survey respondents preferred a rental discount above all other monetary incentives. Another 28 percent preferred cash as their incentive. The rest preferred a rebate on their security deposit or a gift card.
Age group is a factor when it comes to cash incentives. Therefore you need to consider the average age of your property’s tenants before offering a discount on rent. The recent study showed that the 25 to 34 year range preferred the discount the most, while 35-44 preferred it the least.
When it came to cash instead of a rental discount, the 35-44 age range preferred cash the most, with the 18-25 range in a close second.
What About Other Incentives?
Other incentives, such as a household appliance, television, furniture or computer are preferred by some tenants — but this is secondary to cash incentives. Gender also plays a role when it comes to these types of incentives. Men preferred a household good more than women.
Picking the right incentive to keep your tenants in place is important. Even if you are offering a cash incentive to your tenants, you’re saving yourself the money you would have spent on finding new tenants. It costs more to have a property sit vacant and it costs an extensive amount to advertise versus just offering your current tenants a reason to stay.
If you feel you’re losing tenants at the end of their lease, ask yourself what reasons you are giving them to stay. The rental community is extremely competitive and without incentives you won’t have much of an edge over the various other properties in the area.