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Why Incentives Are Still a Necessity

Why Incentives Are Still a Necessity

Just five years ago, we were all talking about concessions and the need for property managers and owners to make them. From discounts on rent and waiving deposits, to freebies and even more creative incentives, there was a real need to be more competitive when it came to getting the interest of tenants. The vacancy rates were high and there was a real need to incent tenants to consider one property over another. The tables have turned, however, and this simply isn’t the case today.

With occupancy rates in the 90th percentile in most major markets, we’ve seen incentives such as these all but disappear. Yet, according to a recent survey conducted by Apartments.com, tenants can be swayed to consider a move to a new property for the right incentive. And, in fact, only 6% of respondents said there was nothing that could be done to convince them to leave their current property.

What this says is that incentives has a real place in the marketing plan of any multifamily property. As such, it’s necessary to understand what will excite tenants enough to influence their decision in favor of your property. According to this same survey, there were three things that motivate:

  1. A big discount
  2. More space
  3. A free month’s rent

Taking #1 and #3 together, this means that financial incentives are perceived with highest value. Yet, it’s not all about money. Respondents also noted a number of factors that significantly impact their rental decisions. These include:

  • 57% = Safe area with low crime
  • 50% = Convenient utilities and amenities
  • 48% = Large apartment sizes
  • 38% = Near schools or job
  • 33% = Good parking
  • 26% = Allows pets
  • 21% = Cool city/neighborhood
  • 17% = Neighbors

For managers and owners, this should be considered a call to action. Incentives do not only come in the form of a coupon. Many prospective and current tenants view incentives as the things that are inherent to your property. So, if your property is located in safe neighborhood with a low crime rate, this should take priority billing in marketing materials, and should be targeted at tenants who do not currently live in such conditions. The same goes for amenities and unit size.

The key is to consider the property’s strengths and play to them—offering them to prospects as a benefit of making the move. And, because keeping a tenant is far less expensive than retaining new ones, you will also want to make sure not to overlook the loyal tenants you already have. Remember that they, too, are being lured by the competition. So, give them the same reasons to stay.

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  • While I support the main idea of this blog, I have to caution against ever promoting your property as being in a safe neighborhood. Honestly, I think this could backfire and have an adverse effect. It would be nice to hear suggestions as to real life amenities that would set your community apart from the rest. However, if everyone in a five mile radius offers pretty much the same thing, then what are you to market and in what creative way could you do it?

    From a personal standpoint, as a Renter, I would move in a heartbeat if I could update my light fixtures myself if the company policy allows and if the apartment itself has butt-ugly ones they won't change. Decorating is just the hottest ticket out there and I think Managers should make the most of this. Painting, peel and stick wall papers, peel and stick backsplashes - just being able to add your own personal thumbprint - temporary though they may be would be a big incentive to me if all other things were equal.

    For those properties that are adding amenities, go for the big stuff that will add more to a healthy lifestyle: Circadian Rhythm lighting, high efficiency heating systems with better air filters, countertop surfaces that are better than a porous germ-filled surface, hands-free flush toilets ... I don't know - something that can and will set you apart. Just saying that your apartment home's large daylight windows and large rooms may not be enough in our competitive markets.

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