Is it better to give first half month free to rent units

Chicago, Illinois
General Landlording & Rental Properties
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Is it better to give first half month free to rent units

Atul Mohlajee
Oak Park, IL · Member since 2014 · 285 posts · 114 votes

I have four vacancies, an SFH, 2 Flat, and a condo for a month. All units are rehabbed/prepped for renting and show well. started at high rents but have reduced rents to average in the area of Forest Park. just a few unqualified applicants. Almost rented to a family and checked that both had multiple criminal records while income and credit were ok.

Will it help if I give first half month free vs reducing rents further.  Idea is renting them quickly.

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Theresa HarrisPro Member
Member since 2019 · 15k+ posts · 11k+ votes
4y

If you want to do half a months free rent, you always do it at the END of the 12 months.  Otherwise what is to stop them from moving in, and then moving out before the lease is up.

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  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    4y

    I'm starting to see these questions a lot in forums and it's making me nervous about future rental rates! Anyways.  

    The typical issues investors don't get applications is price, lack of amenities, better competition, or a combination. Sounds like your screening criteria is solid and I wouldn't dismiss criminal records. Rental demand is hot. I don't know your neighborhood but you should be getting some action. Try relisting again with BETTER pictures. Pictures are worth a thousand words. Make sure you're on FB, Zillow, and Apartments.com.  

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  • Theresa HarrisPro Member
    Member since 2019 · 15k+ posts · 11k+ votes
    4y

    If you want to do half a months free rent, you always do it at the END of the 12 months.  Otherwise what is to stop them from moving in, and then moving out before the lease is up.

    5Reply
  • John Teachout
    Rental Property Investor · Concord, GA · Member since 2015 · 3k+ posts · 3k+ votes
    4y

    Free rent is probably not the solution in this case. Either your units are not up to expectation (for the price), you're pricing over market rates for the area or your marketing isn't capturing the right potential tenants. My guess is you're asking too high of rent. When we have a property and aren't really confident in what the market rent is, we usually start high and then make reductions until the interest level is appropriate. The rental clientele is continuously changing so the people looking this month aren't likely to be the ones looking last month. Sometimes the wording of a listing can turn people off so maybe have someone review that too. We've found that a strict no pet policy will reduce the number of applicants or get you an ESA. So consider that as well.

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  • John UnderwoodPro Member
    Investor · Greer, SC · Member since 2014 · 13k+ posts · 17k+ votes
    4y

    Where are you advertising?

    I am still seeing overwhelming demand for rental units at top prices.

    I start with just Zillow and take applications there too.

    In the unlikely event that doesn't generate enough demand quick enough, I post on FB market place, Facebook rental groups and Section 8 websites.

    I love section 8 and it has worked out really well for me and I am always looking for an opportunity to make more of my properties guaranteed government paid.

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  • Atul Mohlajee
    OP
    Oak Park, IL · Member since 2014 · 285 posts · 114 votes
    4y

    Addresses are 1428 Elgin Avenue $2300 (SFH) 1108 Desplaines Avenue $1700 and $1600 (2Flat) all in Forest Oark, Illinois. They are in Zillow, realtor.com and apartments.com

    Donot have links because coldwell banker is marketing.  
    please review and give your feedback 

    Thanks. 

    0Reply
  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    4y
    Quote from @Atul Mohlajee:

    I have four vacancies, an SFH, 2 Flat, and a condo for a month. All units are rehabbed/prepped for renting and show well. started at high rents but have reduced rents to average in the area of Forest Park. just a few unqualified applicants. Almost rented to a family and checked that both had multiple criminal records while income and credit were ok.

    Will it help if I give first half month free vs reducing rents further.  Idea is renting them quickly.


    I suspect you are over-priced. 

    You started with high rates and they didn't rent. Now that they've sat on the market with price reductions, people are wondering why they haven't rented and assume it's over-priced or some other issue. I recommend you lower the price or maybe even take it off the market for a week and then put it back fresh.

    Rental demand is strong in most places. If you're not renting quickly, it's because you've over-priced compared to the competition. 

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  • Julie Hartman
    Property Manager · Denver, CO · Member since 2021 · 667 posts · 587 votes
    4y

    @Atul Mohlajee Your photos look good and both properties look clean. Rentometer agrees with your pricing but looking at other listings in the area, you are priced high on your Elgin property. You probably need to come down at least $100 to start. The basement shower at that property looks a little scary. I would have it re-grouted and it will look more appealing. You could also stage them a bit and it may help. I would try that before offering rent incentives. 

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  • Paul De Luca
    Real Estate Agent · Chicago, IL · Member since 2018 · 1k+ posts · 1k+ votes
    4y

    @Atul Mohlajee

    I agree with @Nathan Gesner's advice.

    You're feeling the pain of vacancy because you made the mistake of overpricing your units. I would not offer a discounted first month since I don't think the solution to losing revenue is to offer to lose more revenue willingly. Price your units at market rates and don't make the same mistake again.

    0Reply
  • John Warren
    Real Estate Broker · 3412 S. Harlem Avenue Riverside, IL 60546 · Member since 2015 · 6k+ posts · 5k+ votes
    4y

    @Atul Mohlajee I don't think you are dramatically overpriced. I have clients that are getting monster rents in these neighborhoods, and the rental demand is through the roof. I would look more closely at the areas and see how your properties stack up to other rehabbed homes. There is a very high demand for nicely renovated homes, and from the pictures I noticed that these had a lot of dated features. The marketing was fine. 

    Are you getting feedback weekly from your agent on how showings are going? How many showings are you getting? These are the kinds of neighborhoods where these should be rented in days or weeks... not months. 

    3Reply
  • Craig Janet
    Member since 2019 · 223 posts · 261 votes
    4y

    I having trouble filling vacancies in a couple of my rentals. I'm very experienced and never had this problem before. I lowered my rent $300 from my previous rate that I was getting from the old tenant. I think inflation and the economy is starting to scare folks from moving/upgrading. If renters are strapped for cash they will not want to spend the money to move. They will just stay where they are.

    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    4y

    When you get only a few desperate applicants you know you are overall not attractive; strong applicants pick their cherries. Now the question becomes is it price, condition or location? Or a mix?

    If you have to go mystery shopping and see your competition in person, I promise it will be eye opening!

    0Reply
  • Jonathan KlemmBusiness Member
    Moderator
    Contractor · Chicago, IL · Member since 2016 · 4k+ posts · 2k+ votes
    4y

    Hey @Atul Mohlajee - I am also in Chicago but have a bigger building in the Village of Cicero.  I think the most important thing is to always find the right tenant.  If you bend your vetting criteria and take a less qualified tenant I think things can end up much worse.

    I think if you are priced right and have a good product it should still rent.  It's a function of supply and demand.  Are you trying to rent it yourself?  Which platforms do you have them listed on?

    I personally don't think you should need to give half a months rent-free.

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  • Eudith VacioPro Member
    Real Estate Agent · Chicago & NWI · Member since 2015 · 860 posts · 521 votes
    4y

    Hey @Atul Mohlajee - if you're idea is to rent them quickly, I would reduce the rents. But to @John Warrens point, if you have a realtor helping you, they really should be doing this work for you and helping you figure out what needs to be done to get them rented because it really shouldn't be taking that long..

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