Expand the Value of Concessions
Make the good will engendered by move-in and lease-renewal concessions last the length of the lease.
The value of — and a resident’s happiness about — a free month’s rent as a move-in or lease-renewal concession will be short-lived if the concession lasts for only that first month. But it doesn’t have to.
According to a post by Lori Hammond at Property Management Minutes, some apartment communities spread the concession across the year and link positive behavior to the concession’s retention. For example, a leasing agent could offer a new resident a $1,200 total rent concession that is applied monthly — as a $100 monthly rent discount — as long as the rent is paid on time. If the rent is late, not only does the resident have to pay the standard late fee, but he or she loses that month’s portion ($100) of the concession.
After a year of monthly reductions in rent, an apartment community might want to offer this resident a discount on the first month’s rent of the new lease, before the concession-free rent kicks in. Not only does that concession soften the blow of a rent increase for the rest of the year, but it’s a timely incentive to keep the resident from moving.
Whatever the concession, Hammond suggests phasing them in annual terms, whether its $100 off each month’s rent (a $1,200 annual value) or 50 percent off the first month’s $1,000 rent as a lease-renewal concession (a 4 percent discount on a year’s rent).