The best apartment leasing incentives are the ones that entice renters (without hurting your bottom line). That can take trial and error to get right. Some renters may not be enticed by a waived security deposit, but they might be interested in flexible lease terms. Every community, and every renter, is different.
Let’s explore the incentives property managers can use to attract renters. At the end of the article, we’ll also touch on three leasing incentives that don’t work and explain why.
1. Resident referral program
The first apartment leasing incentive on our list is actually more of a benefit for current renters. The incentive could be reduced rent or even a free month of rent. A resident referral program is a great way to build a stronger, tighter community. After all, residents will be “paid” to live closer to friends or family. If you have a program like this, make sure your internal communications are promoting it repeatedly.
And don’t forget: Happy renters are more likely to provide references, and they’re more likely to leave positive property reviews.
2. Give a free month of rent
Some property management businesses offer leasing incentives that make a big difference to budget-conscious renters. There’s arguably no better way to get someone’s attention than a free month of rent. (Some properties go as high as six weeks!)
It’s expensive to move, especially for long-distance or out-of-state renters. Between moving fees, first/last month’s rent and security deposits, a move-in special might be the push a prospect needs to consider renting from you.
3. Reduce the security deposit
A security deposit is a safety net for you and your owners. It might not be possible to eliminate, but you may be able to reduce it. This can be done across the board or only for select renters with high credit scores, good rental history, etc. If you’re a property manager who collects first and last month’s rent in addition to a security deposit, you might be able to ease one or more of those requirements. That’s an easy way to make your property more enticing to prospects.
4. Offer longer lease terms
A free month of rent has the potential to negatively impact your monthly reports. It might be easier on your bottom line if you offer reduced rent on a lease. This spreads your free month incentive over the course of a 12-month lease. The upside is that you don’t have a big hole in your earnings for the month, and renters still get a great leasing incentive.
As another option, you can provide discounts for longer leases (18 months or more). That ensures less turnover and provides a special incentive for long-term residents.
5. Offer shorter lease terms
There are circumstances where a little creativity will get your property filled faster. Students and seasonal workers might be looking for shorter leases in the six- to nine-month range. With a shorter lease, short-term residents don’t have to stay where it no longer makes sense for them to live. They’ll save money on rent because they have the freedom to move on sooner, penalty-free.
6. Waive pet deposits (applies only to pet-friendly properties)
According to the 2022 NMHC Renter Preferences Survey Report, 51% of respondents prefer pet-friendly apartments. So in addition to making your pet policy easy to find online, consider making your properties even more welcoming to pet owners. If your prospects with pets are considering your property and a comparable property in the area, they’ll be more likely to choose the one that waives (or reduces) the pet deposit.
7. Offer the amenities your community wants
There are so many ways to create value without offering free or reduced rent. The 2022 NMHC Renter Preferences Survey reveals the best amenities according to renters. To get you thinking, check out the top-10 list of renters’ favorite features and amenities, starting with the most desired:
- In-unit washer and dryer
- Air conditioning
- Soundproof walls
- High-speed internet access
- Garbage disposal
- Walk-in closet
- Pre-installed window shades/blinds
- Patio or full balcony
- Microwave oven
Don’t just go by this list. Your apartment community preferences are probably different than the national average. On your next tenant satisfaction survey, ask your residents to rank the amenities listed above. Add in a few that make sense for your property. That will tell you what people love about living there as well as what may be missing.
PAY ATTENTION TO THE TRENDS
The popularity of some amenities can wax and wane. For instance, “better modular closet systems” saw the highest year-over-year increase in interest. In 2020, this feature only appealed to 56% of renters surveyed. In 2022, this figure grew to 72%. That’s a 16-point difference! It’s also a sign that people are looking for more customizable storage space — a good thing to know when you’re looking to add amenities.
8. Subscriptions to gym, grocery deliveries, etc.
If it’s not in your budget or floor plan to add a gym — but your renters want one — you might be able to compromise by subsidizing their gym memberships. See if you can partner with a local gym for a free or discounted membership. You might be able to do the same with a grocery delivery service such as DoorDash or Uber Eats.
Just keep in mind that a subscription is nice, but it’s not the most powerful apartment leasing incentive. There’s no comparison to free or discounted rent. That said, it’s a budget-conscious incentive that might help entice more renters to your community.
Apartment leasing incentives that don’t work
Now that we’ve looked at the best leasing incentives, let’s look at some of the worst. These three “incentives” all lack credibility because they don’t really save the renter any real money. (Aka don’t nickel and dime your community when it comes to leasing incentives.)
1. GIFT CARDS
While it sounds like a nice part of a move-in package, a gift card to a local shop or restaurant isn’t much of an incentive to rent. Residents are looking to save hundreds of dollars or more (depending on rent in your area). A coffee break or restaurant experience doesn’t even come close.
2. PROPERTY IMPROVEMENTS
The reason we’re including this here is because property improvements are a standard part of market rate rental pricing. You won’t necessarily be able to increase rent just because you put in new appliances. If the appliances are old and in need of replacement, you’re simply doing what you need to do to stay competitive, attract prospects and retain residents. Of course, if you really go above and beyond with luxury amenities and appliances, you might have a case for treating these upgrades as leasing incentives.
3. GIFT BASKETS & WELCOME PACKAGES
It’s thoughtful of you to provide a welcome package or gift basket to new residents. Such a package might include snacks, replacement household items like light bulbs, a guide to local restaurants and activities, gift cards, etc. And don’t forget a handwritten welcome letter!
However, while a welcome package might help your new renter feel more at home and starts your relationship off on the right foot, it doesn’t make sense to offer one as an apartment leasing incentive. Just imagine what “free gift basket for new leases” would look like on a billboard! Not too impressive.
Counterpoint: Not everyone believes in apartment leasing incentives
If an incentive results in higher retention and shorter vacancies, you stand to profit in the long run from any discounts in the short run. Still, incentives are as controversial as they are popular. Not everyone thinks they’re a good business practice. Some people think incentives cheapen your brand and image.
On the other hand, the right leasing incentive is eye-catching and can keep your brand top-of-mind for future renters. If your properties are being outpriced by a local competitor, you might not be able to lower rent, but you can entice prospects with something else.
If nothing else, an incentive can get people talking to you. That means leads you might have missed without an incentive.