Offering Rent Specials to Tenants Can Be a Costly Mistake: Here’s Why

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The rental market is in a strange place right now — on the macro scale, rental vacancies across the country are lower now than they have been in years, but on the micro scale, it seems as though any given property manager you talk to is constantly scrambling to fill vacancies. The pressure to fill vacancies has gotten so strong that even in this “landlord’s market,” many property managers are filling their ads with special offers to try to lure tenants into their properties.

It’s a remarkably common tactic, and it definitely works to inspire some people to move in — but in the long run, there’s a potential downside to offering specials. It’s well-hidden because specials are like painkillers: they cover up something wrong and make you feel like you’re okay when you’re really not.

How do you know they’re covering up something wrong? Simply put, because the demand is out there. So if your property is just sitting, it’s because there’s a deeper problem; ignoring it in favor of promising free rent, a new microwave or a gym membership doesn’t solve the underlying problem.

Related: 6 Tips to Protect Newbie Landlords Against Bad Tenant Situations

Indications of an Underlying Problem

If you feel inclined to offer a special in order to get someone in your property, stop and ask yourself: “Is the problem…

  • “…that my rentals aren’t market-ready?”
  • “…that my company doesn’t have an established position within the marketplace?”
  • “…that my print advertisements are poorly designed (or non-existent)?”
  • “…that my online advertisements are poorly designed (or not getting any traffic)?”
  • “…that the landscaping/exterior of the properties is clearly uncared-for?”
  • “…that the rental office looks ill-maintained, so anyone who see it will assume that the actual rental buildings themselves are similar in status?”
  • “…that the rental office is only open on weekdays, during work hours, so many people simply never have time to come in for a talk?
  • And so on.

Only if all of the other problems with your marketing and maintenance have been dealt with can a cleverly-designed special have a long-lasting change on your vacancy rates. If you’re using a special to cover up a marketing or maintenance (or other!) failure, it’s only going to get worse for you as time goes by.

To understand why, think about the type of tenants the special will attract. Will it be a tenant who can’t really afford the place without the free rent special — so past due payments eventually increase? Or a tenant who is always looking for a handout and won’t renew their lease without one — thereby increasing your turnovers? Clearly neither of these types is what you really want to attract.

Alternative Offers

That doesn’t mean “don’t offer any specials.” If you’ve got your bases covered from a marketing, maintenance, and customer service perspective, there’s absolutely nothing wrong with offering a modest special offer that doesn’t attract the wrong types of tenants. Think about offering discounts on services that only the right types of tenants would appreciate and could afford to take advantage of, like dry cleaning or organic shopping, etc.

Related: Here is the Best Indicator of Tenant Quality… Hands Down.

And just so you don’t think we live in Never-Never Land and are out of touch with reality, we do understand that there are properties in locations where a landlord has no choice but to offer specials to fill their vacancies. Often, it’s because all your competitors are offering specials, and your phone won’t ring unless you play the same game. We’ve managed properties like these, so we do understand. In our experience we almost always have more headaches with these “special” tenants, though. We now try to avoid properties like these, where we can’t find a competitive edge to avoid having to follow along.

Don’t forget to check out your successful competitors. You’ll probably notice if you look carefully around your market that there are those landlords that never seem to offer a special — and yet never have to deal with significant vacancies. If you find one, take a careful look at what they’re doing, then copy what’s making them successful.

Landlords: Have you ever offered rent specials for your tenants? If so, did you achieve success or is it something you regret?

Let’s discuss in the comments below!

About Author

Drew Sygit

While in the mortgage business, Drew rose to a VP position at the first broker he worked for and then started his own company. In the pursuit of excellence, he obtained several mortgage designations and joined mortgage & several affiliate association Boards. He also did WebX presentations and public speaking. It was during this time he started personally investing in single-family rentals, leading him to also start Royal Rose Property Management with two partners. He also joined the Board of a local real estate investors association, eventually becoming its President. The real estate crash led to an offer from the banking industry to manage a Michigan bank’s failed bank assets they acquired from the FDIC. The bank acquired four failed banks from the FDIC, increasing from $100M in assets to over $2B while he was there. After that, he took over as President of Royal Rose Property Management. Today, he speaks at national property management conventions and does WebX presentations.


  1. Michael Seeker

    Great article Drew!

    I have an almost 0 vacancy rate on 21 units and it’s primarily due to the mentality you outline here. The last thing I want is the person who “has to move” but doesn’t have enough money to do so. That represents poor planning on their part and that isn’t likely to change the day they move into your unit.

    As a rule of thumb, if a unit is empty for 1 month during peak times (April-Sept for me) or 2 months during slower times (Jan-March and Oct-Dec) then I need to fix something, paint or remodel. I always ask for feedback on showings – occasionally folks will be brutally honest and point out what should have been obvious.

    I’ve never offered a rent special and hope I never own a property that puts me in that position!

  2. Cordell M.

    I liked the idea of ‘offering specials relevant to the type of tenant you want to attract.’ We bought three single family homes on the same street; two have gas, one has an oil furnace. Our management company told us several were interested in the property, but expressed concerns with the oil heat. Given the time of year/other projects we have, we offered $75/month off rent for Dec., Jan. and February and had the unit filled that night. While we may put a gas furnace in the future, at this point this was our best fix. Thanks for your contributions!

  3. Dawn A.

    I have seen places advertising “no security deposit” specials. Why would you take away your security? That makes no sense. I’ve seen places advertising “free first month’s rent”. This just attracts tenants who don’t have the money to move in outright. The best rent special is having a clean, safe and secure place to live that is quality at a fair price.

    • Drew Sygit

      DAWN – as we’ve stated, we’ve managed places where we had to offer specials on rent. We don’t like the idea of “no security deposit” as we can’t think of a worse way to attract tenants that will not respect your property! Instead of offering a free first month’s, we tweaked our offer to, “1/2 off first month’s rent and 1/2 off 3rd month’s rent”. The key was we also required that the 2nd & 3rd month of rent (their 1/2) be received by the first of the month to be eligible for the other 1/2 off in the 3rd month. So far, those tenants have paid on time even after the 3rd month:)

  4. I agree that communities should think twice before offering move in specials that essentially misrepresent the value of a community to a prospective resident. After all, even though everyone likes a good deal, most applicants want to feel like there moving up in the world – not gaining cheaper access to something that may not be as good as advertised. Savvy operators are turning to modest changes in lease offer terms that still protect them against potential payment risk and help applicants at move in and throughout their lease. Security deposits substitutes lead this charge, though that’s non-refundable money. Rent from payroll came next as an alternative to to higher security deposits or concessions that actually helps residents stay current without late fees throughout the duration of their lease. That’s added value all around.

    • Drew Sygit

      ELLEN – you make some great points, thanks. We’ve tried “rent from payroll” on low demographic properties, but the applicants we’ve proposed it to balked and disappeared. Probably a good thing! We’ll continue you to try it though:)

      • Drew,
        I am glad to hear you are open to introducing new tools to improve conversions and resident performance, but regret that our companies have not worked together yet. Perhaps you’re thinking of a different service. Please feel free to email me directly and we can pursue. Thanks, Ellen Calmas

  5. So, nobody in the financial media is suggesting that landlords fill their vacancies by lowering the rent so that low income workers can actually afford the rent. Its just amazing that landlords and real estate investors keep getting richer while wages are stagnating or going down for so many people in the rest of America. I’m not suggesting that landlords should take a vow of poverty, but only that America find other ways to build wealth like manufacturing and exporting quality products as opposed to relying on the value of real estate or stocks to go up.

    • Scott,

      I can see that you feel strongly about this issue. And I’d like to help you fulfill your dream. On my next vacancy let’s target lower income tenants and we’ll lower the normal rent to something they can afford. Let’s say we make it $100. less per month and then you can send me the $100. every month. Does that sound like something you can manage? I’m really happy to see somebody trying to make rent more affordable, especially since I know I can’t afford to do it myself.


  6. As a former tenant, I appreciated the “first month free” or “half month free” specials. When I was looking for a nicer, larger or different location apartment, I could not give notice on my current rental until I found the right one since it could take many months to find. I could end up having to move out at the end of my notice with no new apartment waiting! Consequently, when I did find something suitable, I had to pay double rent for a month as current landlord would require a month’s notice and last month’s rent, and new landlord would require lease and first month paid to secure the new apartment, both covering the same month. This is a major waste of money for most tenants.

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