Veteran landlords and property managers know all too well the hefty costs imposed by vacancies, and know that sometimes it is worth incurring a small cost to retain good tenants for another year or two. Tenants who consistently pay rent and take care of the property are an asset worth keeping, especially if the only incentive needed is an upgrade that will boost future rents anyway.
A recent study conducted by SoftwareAdvice.com surveyed 4,600 tenants on which incentives would entice them to renew their lease when the term expired. The results, while not surprising, reveal easy, inexpensive ways to retain the good tenants you currently have.
More than half the tenants surveyed (52 percent) indicated they would be motivated by monetary rewards, particularly in the form of discounted rent (58 percent). Only 27 percent preferred interior upgrades like new carpeting or paint (this is actually good news, since paint and carpets often need to be replaced between tenancies anyway, and therefore would not prove a long-term investment in the property). Free services such as gym memberships and household items including televisions were less attractive to renters (both coming in around 11 percent) in comparison.
Money certainly matters, but the preference for cash vs. cheaper rent varied among the different age groups. The 25-34 age group ranked highest among those favoring cheaper rents while the 35-44 year olds were more motivated by cash incentives (23 percent).
Property managers should take special care to offer incentives based on the age group they serve. Knowing what your residents want will go a long way in keeping them happy and staying put.
While money was by far the most popular incentive, there are still other items tenants reported would encourage them to renew their rental contract. One such incentive was household goods, namely televisions and kitchen appliances. When flat screens were first introduced, property managers were offering them as incentives for new tenants to sign up or for old tenants to renew. Interestingly, of the household items which tenants considered incentives for lease renewal, kitchen appliances won over televisions, computers and furniture. Perhaps the reason is the decline in pricing of LED and LCD televisions, or perhaps tenants never considered flat TVs that much of an incentive in the first place. Nevertheless, 37 percent of tenants surveyed said they preferred kitchen appliances as an incentive.
Property managers might not be surprised by a slight gender gap in those who preferred household items as their reward. Men (64 percent) chose a television, while 59 percent of women chose a tablet computer.
According to the survey, unit upgrades such as new carpeting and washer and dryers are slightly higher on the list than kitchen appliances when tenants are asked to choose between them. New carpet and flooring (31 percent) came in slightly higher than washer and dryer and kitchen appliances (both at 30 percent). When considering incentives, landlords are advised to choose permanent additions that will remain in the unit and continue to add value even after the current tenant vacates, for example washers and dryers, or upgraded kitchen appliances such as refrigerators, dishwashers and ovens. Bathroom upgrades also increase long-term value, such as installing a jacuzzi tub, updated tiling, countertops or sink hardware.
The report is chock full of information that will help property managers retain their current tenants as well as provide incentives for new tenants to sign on; view the entire SoftwareAdvice report here
The survey was conducted primarily on residents of multi-family dwellings, but landlords of single family homes should take notes as well.
Incentives of all kinds can entice tenants to either sign up or renew with you however, there is no substitute for a great product and excellent customer service.
What incentives do you use to get your tenants to renew? Do you agree or disagree with the poll?
Thank you for this post. Good luck.