Topic: Employee Compensation - Discounted Rent

I'm attempting to gather more information on the average percentage that is discounted from rent for employees that live on site.

Right now they are making $26,000 annually, with 20% off rent and they paying $1020 = only $200 off a month. While looking on the forums, I noticed several people said theirs is closer to 30%. I think it greatly benefits the reputation of the property to have the employees continue to live here, and a higher rent discount will boost morale.
How can I properly write a letter to convince my corporate headquarters to give the employees a higher discount? Do you know of any tax write offs associated with that type of compensation? (The headquarters files taxes out of Illinois.)

Thank you!

Hi Christine -

This is admittedly a tough topic. I have lived on site at different points during my career, and the discounts have been different with each company I have worked for. Some concessions have also been dependent on position held as well as tenure. Some haven't even offered a discount and have discouraged employees from living on site, while I have had other companies offer free rent & utilities.

First, I would like to point out that at 3 times the monthly rent of $1020, your employees are not income qualifying for the homes they are attempting to rent. Even with a discounted rate, (assuming the rent is $1020 less a $200 per month discount for a total of $820/mo) your employees just barely qualify. 3 times is fairly industry standard, so assuming the community is market rate, this could easily be your first talking point.

Having lived on site, it's a tough task that routinely requires an employee to go above and beyond what they already do in a normal day. How often are your employees tasked with something after hours? Is this something you can bring to the attention of corporate? Are they closing the pool, helping residents or related? Are they checking lights after hours? Are they chatting with tenants while on the grounds?

You also have to keep in mind the financial aspect of the management; Would it be more cost effective to give your employees an increased discount in lieu of a raise? Are there other options that can produce the same morale boost without cutting into rental income? Would you consider other options such as asking management to pay utilities - 10% is roughly $100 so that can easily be an electric bill, water bill or similar.

Also, I always liked the tenure option.
For every year worked with a company, an additional percentage is added onto the employee concession. For example: 1 year = 20%, 2 years = 25% and so on.

I hope some of this helps, and remember all you can do sometimes is ask. Best of luck!

We give 20%, but we only have 68 units.

Kristi brings up all the relevant points including why it is sometimes a great idea to have someone live onsite. Your Management Company may also be concerned about reporting the "free rent" or "discount" as income for the employee and how that is handled at tax time. Most companies I have been involved with offer 20% discount to its employees. My personal opinion is this: if your Property Manager and/or your Maintenance Supervisor/Tech is relocating to handle their position, it is often a perk to them to have a place to live free of charge each month. This gives that person time to know the property, know the area, etc. So, if this is a new employee without tenure, and the company only offers this perk to people employed with the company for so many years, for example, then that could be an issue.

When I traveled all the time, I often stayed short term in a Model. When I eventually set up my office at a property, and lived onsite, I enjoyed it and handled all of the things Kristi pointed out, including being there on some holidays to collect an post rents and charge late fees, return emails and leasing calls. And that kind of diligence meant our properties' occupancies were consistently 98% or better with rent growth.

Our complex has heat, water and hot water inlcuded with rent, but there is a small charge of $20, $25 or $30 within the rental price. That total is then discounted 20%.