Free Rent vs. Great Marketing

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Every day your residents drive by signs offering FREE RENT. In addition, there is a loud well-organized voice speaking through television, blogs, websites and print promoting free rent. We all know that this is has a negative long-term financial impact on our business. How can we respond effectively to this growing market trend?

Real estate research firm Reis, Inc. reports “the vacancy rate for U.S. apartments reached its highest level in more than 20 years in the second quarter and could soon exceed record highs if the recession persists.” To maintain occupancy, many major apartment firms have chosen to boost concessions while sacrificing rental income. (Reuters, “U.S. Apartment Vacancies Near Historic High” 07/08/09 - Full Story) Websites promoting free rent have even infiltrated mass media. On July 10, 2009 a featured story on CNN with Robin Meade recommended that renters get the best deals through RentOMeter.com. The home page says, “Paying too much on rent? Charging too little for rent? Enter info for your apartment below and find out!” The site also has built in bookmarks to share this information on the various social networks. Another new website is TwoMonthsRentFree.com. When you visit the site you find not only two months free, but up to three months free!

Am I the only one who wants to put her head out the window and scream, “Stop the Madness”? Sites like these depend heavily upon apartment listings for their success. However, if we choose to participate, aren’t we hurting our own industry? We should be learning and supporting new technologies, like social networking, that are giving us historic new marketing opportunities. According to Jennifer Nevitt Casey of Bravo Strategic Marketing in my article “What to do instead of Free Rent”, (www.TotallyToni.com) “We are only hurting ourselves and believe it or not, we are still renting the same number of apartments based on available market share, just at much lower rents. The continued consequence of these irresponsible actions is an owner unable to make a mortgage payment by fourth quarter.”

Lowering rent does not create more customers in the marketplace; it simply reduces the revenue available to maintain the overall quality of life in our communities. Communities offering FREE rent specials frequently suffer an increase in skips, turnover and maintenance costs while also experiencing a decrease in the quality of the resident profile. What if instead of being the best deal – you simply decided to be the best place to live? We need to create marketing that communicates one message, “This is the best place to live!” Then, the reason for renting is the same reason for staying.

What if our marketing strategy also improved our resident retention and reduced turnover cost? I have been working with clients who feature deals to current residents only! That’s right –residents who sign a new lease are rewarded with attractive incentives. Qualifying is simple – just lease and become a resident! Food for thought!

If you are marketing “ the best community” instead of “the best deal” I want to hear your story. Tell me your ideas, what has worked, what hasn’t, where you are going from here. Tell me how free rent has impacted your communities, and if you have been able to successfully navigate away from free rent offerings. Together we can be the best voice for the good of our investors and our residents!

Toni Blake - President, TotallyToni.com

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Comments

Stop the Madness!

I have been in Property Management for longer than I care to remember. I have seen every marketing tool as it comes down the highway. My best marketing “gimmick” is having the best property. I know that sounds corny, but I have a great team of professionals who excel in customer service. My maintenance team is second to none. Our property is 5 years old and still looks like we are in lease up.

I have several brand new properties within a 5 mile radius of me and they are "giving away the farm" with the free rent. I have noticed on my weekly call around that they are one-upping each other with the dollar amount of free rent but I don't notice a big change in the number of new leases.

I am still a big fan of being the best period. I have had to lower my market rent to stay competitive, but nothing like what the competition is offering.

I called Toni last week and we brain-stormed on some new ideas to increase traffic. I can't wait to get all the pieces together, present them to my owner and start a great resident appreciation campaign.

In closing, I definitely agree with Toni, that we need to stay away from offering free rent!

Vickie Keith
Property Manager
Walden at Providence Apartments

Vickie D. Keith at 7/22/2009 11:25 AM

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7/13/2009

Comments

Stop the Madness!