Keeping vacancy rates low is good for several reasons. For one, when residents choose to live in your units for longer periods of time, it saves you money. Not only do you have fewer turnover-related expenses, but you will also likely encounter fewer issues (and expenses) that you have to deal with. That’s why one important strategy for reducing vacancy is to source high-quality residents, as they are more likely to treat your unit with respect and stay put for a longer period of time.
A second strategy some property managers use to reduce vacancy in rental properties is to offer incentives to rental applicants. Read on to learn more about when you could consider using incentives as a way to secure new residents and reduce vacancy.
When to Consider Offering Incentives to Fill a Vacant Unit
Offering incentives to applicants can be an effective way to fill vacant units, but they should be used strategically. As a property management company, we offer our clients the option of offering incentives to potential tenants if the property has been sitting vacant for more than a few weeks.
Examples of incentives include waiving the application fee or offering a free half- or full-month of rent with a signed 12-month lease.
Points of Caution When Offering Incentives
While incentives do stir up interest in the applicant pool, there are a few things to keep in mind. For one, the property management company must remember to actually credit the resident per the incentive. This can easily get overlooked if it’s not part of the normal operating procedures. Two, the money that goes toward the incentive is coming out of the owner’s pocket. Before offering it, they should thoughtfully consider how it fits with their overall investment strategy.
An alternative that we generally encourage, is to lower the monthly rent until we get to a price where the property leases. This suggests that the property is then priced in line with market conditions and the resident who signs the lease will be much more likely to stay in the unit longer because they appreciate that the unit accurately reflects current rental market conditions.
To ask us your questions about offering incentives to fill vacant rental units, get in touch with us at RL Property Management. Also, check out our webinar replay on how to reduce vacancies in your rental units for more strategies to help you become successful with your property investment.
