If You Must Offer Specials…
Final Thoughts on Offering Specials
A recent survey by J. Turner on multi-family attitudes and outlook for 2021 reveals some disturbing info. Well over half of the property management companies currently offer specials. In fact, the respondents report that 66% of their portfolios are offering incentives, the highest since 2010. 15% of the properties are offering over $1200 free rent as an enticement.
Rent concessions are a part of the “new normal”. More than ever, these rent incentives must be applied strategically by an onsite team that is trained and prepared to use this leasing tool properly. As we mentioned in previous posts, leasing specials must only be used for two reasons:
- Occupancy Acceleration – We offer specials to create urgency to lease NOW instead of later. In some very competitive markets, the leasing incentive will be used as a tool to lease here, rather than across the street. Strategic incentives help us equalize the rent pricing so we can then compete in terms of value, overall desirability, and sales skills.
- Appointment Commitment – While not a fan of this tactic, some incentives may be used just to convince the internet and telephone prospect to inquire and visit the apartment community. As we carefully roll out of this COVID-19 environment, rental prospects may need more motivation to make that initial online inquiry or phone call.
Rent Specials are not Good or Bad….
I hear comments like “I hate concessions!” or “We would NEVER offer a special!” as though this important marketing tool is something to detest. Look, when used properly, rent incentives are just another effective tool in your marketing toolbox. Their use is market-driven. It is the strategy the multi-family operators choose to offer specials that dictates the results.
Use specials in a way that maximizes income while minimizing turnover. Properly applied, rent incentives will produce more annual income and less vacancy. Always consider the impact of specials on your current residents. It is a grave mistake to ignore a market that is concession-driven and feel like your property is exempt from that impact.
Finally, we follow the two critical rules of offering specials:
- Rule #1 – No Across-the-Board Specials – Offer specials only on the specific units that require an extra boost to get leased sooner than later. It is crazy to offer a special on your most popular floorplans or locations. Focus on floorplans that have the excess vacancies or notices. Incentives might also be used on your updated apartments to attract prospects to the renovated inventory with the higher rental rates.
- Rule #2 – Never Give Away Rent Without Getting Something Back – We actually use specials to add value and income to the property; not because we are nice and want to give away rent! When offering a concession, extend the lease an extra month or more. Require a commitment and move-in deadline. Get additional protection by having a “Concession Agreement” that charges a penalty if the resident breaks the lease.
If you are just catching this 4-part series on Specials and Incentives….
Go to our blog to read the first three articles. It might save you $$$ thousands.
Let’s make specials, SPECIAL, and always adding value to our apartment community. They should do both!