Wondering your thoughts and opinions on offering incentives to current tenants? Incentives for referring a qualified friend or family member to lease one of our vacant units? Incentive of some sort for tenants who constantly pay their rent on time or are the "ideal" tenant? Incentive for good tenants during lease renewals in order to minimize the turnover?
I'm torn with why reward tenants for doing what they are suppose to: PAY RENT. But I'm curious to hear other landlord's opinions or experiences!
Are you having trouble renting out your units to a point where you need to offer these kinds of incentives?
@Courtney Huntoon , I think it depends on the class of the rental. I offer $100 cash, but most of my places are B+/A- type of properties. I can fill them EASILY without the help of a tenant. And I only pay IF I choose them to be my renter. So far, it has not happened.
What I have done, that I have found has GREAT returns, is to send $100 gift cards to Outback at holiday season for my tenants that have paid on time all year. My tenants feel somewhat 'bound' to me, as this is something no one has ever done for them previously. It is costly for me to do, I have 8 SFR's. But it's better than 'bs'. ;-)
If you have multi, which it sounds like, perhaps a $20 Starbucks gift card would do the trick?
I get what you are saying, the tenants are supposed to pay rent. And pay it on time. What I do is make all rents due on the 1st and late on the 2nd.
Another option is a 'discount' if you pay before the 2nd. Either way it's the same thing, just how you want to package it. ;-)
@Antoine Martel No, not by any means. Just wanted opinions from others who have done it, tried it, or have at least thought about it. :)
@Courtney Huntoon in my experience (Class A SFR and multis) incentives make everyone feel good, but don’t actually produce any improvements in NOI. People refer and renew because they are receiving exceptional service and a quality place to live at a price that they think is fair. It’s not because of free hotdogs at a resident appreciation party, or measly referral credits. If they are truly happy at the property they will tell their friends whether or not you toss them a small reward.
That being said, there’s nothing at all wrong with making everyone feel good, I just think it’s something entirely separate from seeing an actual return on the money spent for incentives.
My landlord has a referral program.
The rationale is if the current tenants are good people, they probably hang around good friends ("birds of a feather flock together"). When I worked in Corporate America and a position opened up, the manager would always ask "who do you know" before advertising the job publicly (80% of the job market is "hidden" this way). Your current tenants are providing referrals for your prospective tenants. Someone who responds to an ad on the Internet is an unknown in terms of their character, even though they fill out an application and undergo a background check of some sort.
In the past, I would get a discount on a month's rent if I renewed my lease by a certain date. My new landlord does not offer this incentive, but the lease automatically converts to a month-to-month arrangement at a much higher monthly rent when the lease is up ("negative incentive") if I don't renew the lease. I've never received an incentive for paying the rent on time, but there is a late fee ("negative incentive") whenever the rent is more than a few days late.
Some larger companies have housing offices to help relocating employees find local housing. I found my first apartment this way back in the 1970s when I got my first job right out of school (I don't remember if I got a discount off my first month's rent for moving in). At least the landlord knows the prospective tenant really has a job.
Larger landlords with buildings in many cities make it easy for existing tenants to move to a unit in another city. When an employer transferred me to a different facility 30 miles away once, I was able to transfer to another apartment with the same landlord to be closer to my new job (the cleaning deposit transferred smoothly and the 30-day notice to vacate was waived). If I was a good tenant at my first apartment, I would likely be a good tenant at my second apartment.
I like to reward good tenants that renew by making improvements to their home which also benefits you. Maybe they need a new frig or new microwave or new flooring. Anything like that makes them feel good and all you've done is improved your property. I just had one that renewed for her 4th year and just happened to ask if she could get new blinds on all the windows. I ran it past the owner and we had all new blinds installed.
Hi @Courtney Huntoon Offering incentives to tenants can be a great, and cost effective, way to find new tenants. A $100 or so reward is a lot cheaper than using a real estate agent to fill a vacancy, and like many people have already stated if they are good tenants themselves the people they know will probably be good as well. As far as offering an incentive for constantly paying their rent on time, I would stray away from that. While you want to have a good relationship with your tenants, they are under a legally binding contract and you shouldn't have to pay them just for them to follow it. I also think @Dick Rosen 's idea for rewarding and incentivizing good tenants to stay by upgrading the unit is a great idea. It's a win win as they get a nicer place to stay and you are keeping your unit well maintained and attractive for when the next turnover occurs.