Property Management: 21 Low Cost Renewal Concessions

landlord real estate agent rental property tips

Property Management: 21 Low Cost Renewal Concessions

SHARE:

What is your customer acquisition costs? What does it costs the property to obtain a new lease? There is advertising, overhead and staff time- all part of the expense for obtaining a new resident. Then there is the customer retention costs.

This article is about retention costs and the use of concessions. I am not suggesting auto-offering concessions as a standard business practice.  They are just another tool in our tool box for use when appropriate.  Before getting to concessions an assessment of  “why” is appropriate. Why is there vacancy of X?  Is your advertising and web presence in order?  What is your showing-to-lease ratio? Is staff trained and up to date on tactics?

Concessions for a multifamily assets are not a given.  Concessions are often a function of competitive factors from competitive properties in the same submarket as the subject asset.

For example, your property may have more in-place amenities than neighboring properties yet have a higher vacancy rate in 2-bed’s versus 1-bed’s.  In this instance, your renewal concessions will be offered only on two-bed rooms with none offered on one-bedrooms.

Gaining further insight into what your competitors are offering requires surveying those properties. This is best accomplished by a third-party service provider to assure independent outcomes.

Many “gift-card” options can be purchased at a small discount to face value if purchased in bulk, particularly with local vendors that offer personal services. They are gaining a new customer, after all.

There is a reason for the order of concession below; the top five add value to the property in some way; the first five concessions are either property upgrades or increase longevity of in-place fixtures. This list provides you with a starting point for selecting concessions to gain renewals.

  1. Refresh paint or adding an accent wall
  2. Replacing older living room or dining room light fixtures
  3. Replacing standard light fixtures with ceiling fans
  4. Carpet Cleaning
  5. Replace older blinds
  6. Car wash gift card
  7. Restaurant Gift Cards
  8. Spa treatments
  9. Go phones / trac phones gift cards
  10. A gift to a charity selected by the Resident
  11. Free parking for one month
  12. Dry cleaning gift card
  13. Dog grooming
  14. Cooking classes
  15. Hair cuts
  16. Shoe shines
  17. Movie tickets
  18. Specialty ice cream
  19. Apple Store
  20. Oil change
  21. Wal-Mart / Target / Kohl’s / Macy’s /
  22. Pizza (always popular)

When selecting local vendors for concessions, consider proximity to the multifamily asset; the closer the better as these will be perceived as having high value because the Resident will know exactly where the vendor is located.

Concession should have a similar perceived value- not necessarily an equal value.

Offer no more than two at one time.   Decide on an initial set of two concessions and test for responsiveness.  Keep testing until you have two that people respond to equally well.

There may be a difference in response rates due to the season or weather. People love cooking classes during cold months and car washes in summer, for example.  Residents will give to a charity during the holidays or select the spa treatment to give as a gift.  There is no reason to guess when you can test.  Testing will lead you to the right offers at the right time.

 

by JOHN WILHOIT JR. on FEBRUARY 7, 2015

Republished with permission from Mr. John Wilhoit, Jr. To view the original article, please visit the Multifamily Insight Blog.

Mr. Wilhoit is the author of two books: How To Read A Rent Roll: A Guide to Understanding Rental Income and Multifamily Insight Vol 1 – How to Acquire Wealth Through Buying the Right Multifamily Assets in the Right Markets. Multifamily Insight Vol 2 is set for release in 2015.

For 50+ hours of property management audio training, 3 books and live weekly leadership academy–surf here, http://powerhour.com/propertymanagement/booksandcourses.

Subscribe for more news and tips!

* indicates required

Share with your friends!

Share on Facebook
Share on Twitter
Share on Linkdin
Share via Email

More Articles from ApplyConnect

Tenant Screening

ApplyConnect FAQ: I’m a Renter. Can My Lease Be Broken Because of _____?

Navigating the world of lease agreements as a tenant can sometimes seem a bit daunting, especially when both parties aren’t clear about their rights and responsibilities. Ever been in a less-than-ideal rental housing situation in which you had to ask yourself, “Can a lease be voluntarily broken, and if so, can it be because of _______?”

Read More »
Tenant Screening

Landlords: The FTC and CFPB Request Public Comment from You!

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have united to inspect how background screening can impact American renters, with a particular emphasis on examining the use of criminal and housing court records and tenant screening practices. As part of a whole-of-government effort detailed in the White House’s January 2023 Blueprint, the FTC and CFPB are seeking public comment until March 30, 2023. We urge you to voice your unique industry perspective.

Read More »

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Share this Article!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

More Articles from ApplyConnect

Blog Topics

Click the dropdown

Tenant Screening

ApplyConnect FAQ: I’m a Renter. Can My Lease Be Broken Because of _____?

Navigating the world of lease agreements as a tenant can sometimes seem a bit daunting, especially when both parties aren’t clear about their rights and responsibilities. Ever been in a less-than-ideal rental housing situation in which you had to ask yourself, “Can a lease be voluntarily broken, and if so, can it be because of _______?”

Read More »
Tenant Screening

Landlords: The FTC and CFPB Request Public Comment from You!

The Federal Trade Commission (FTC) and the Consumer Financial Protection Bureau (CFPB) have united to inspect how background screening can impact American renters, with a particular emphasis on examining the use of criminal and housing court records and tenant screening practices. As part of a whole-of-government effort detailed in the White House’s January 2023 Blueprint, the FTC and CFPB are seeking public comment until March 30, 2023. We urge you to voice your unique industry perspective.

Read More »

Get Started with ApplyConnect!

The nation’s most trusted tenant screening for real estate agents, landlords, and property managers. No cost background checks available 24/7.

©2018 ApplyConnect. All rights reserved

ApplyConnect marks used herein are trademarks or registered trademarks of applyconnect.com. Other product and company names mentioned herein are the property of their respective owners.

Get Started with ApplyConnect!

The nation’s most trusted tenant screening for real estate agents, landlords, and property managers. No cost background checks available 24/7.

©2018 ApplyConnect. All rights reserved

ApplyConnect marks used herein are trademarks or registered trademarks of applyconnect.com. Other product and company names mentioned herein are the property of their respective owners.