Why I Don’t Offer Rental Incentives.

Rental incentives seem to be the cure all for landlords trying to fill a vacant property.

After all what tenant wouldn’t come bounding out of the woodwork for a free month’s rent, a staggered deposit or possibly free TV?

Or perhaps that’s the wrong question. The real question might be “What type of tenant will you get that only responds to a rental incentive?”.

Who Are You Attracting?

That’s the rub isn’t it. Are you actually attracting good tenants by giving away freebies, or are you attracting people taking advantage of free stuff?

In my origin days I spent decades in sales and one of the lessons I learned was that clients who buy on price simply aren’t loyal.

If they’re shopping just for the lowest price, or the best deal, they don’t remember you, just the deal. And often they disappear just as quickly as they appeared because they’re busy shopping for the next deal.

Same can be said with tenants lured by incentives.

What’s to stop them from jumping ship at the end of your six month or twelve month lease with their free month or new TV. After all you know there will be another desperate landlord out there that might be able to match that TV up with the latest Xbox or PS4 or another free month.

If you’re giving a free month away you’ve essentially set yourself up for another month of trying to fill a vacancy which equals two months of vacancies. You’re not solving your vacancy issue, you’re compounding it!

Focus On The Product Rather Than An Incentive

What if you looked at this differently.

What if instead of giving $1,000 worth of rent or $500 worth of game console away you put that money into the property and created a rental that people wanted. That people were excited to live in?

What kind of tenant do you think that might get you?

Maybe a proud tenant who loves their home?

Maybe a great tenant who takes better care of it than someone looking for the next best deal?

Maybe a tenant who stays for years instead of the minimum required duration?

Story Time

One of our first rentals was an up down duplex in an awesome blue collar neighborhood.

It was an awesome neighborhood because it was teeming with people who were accustomed to renting so the pool of potential tenants was very deep.

It also meant there was a ton of competition, so discounts, low rent and even incentives were everywhere. Except at our place.

You see, we’d spent some extra money and shined up the real hardwood floors upstairs that were forty years old. We had a nice bright white kitchen with modern handles and counter tops and we had a modern paint color to make it stand out.

Downstairs we had modern kitchen cabinets put in and new flooring.

Plus we’d fixed up the the entrance and the doors so it looked inviting.

We never seemed to have problems filling the unit, plus tenants tended to stay a minimum of two years, all with no incentives or discounts.

We thought we were lucky, after all we would fill the place within a month all the time and have tenants for years. Unlike a similar unit down the street that was vacant just about every six months with new “For Rent” signs constantly popping up.

Well, one day my wife was in the area, saw a sign announcing an open house for showings and decided to go introduce herself. And take a peek at the competition of course…

Once she walked through the door she realized they weren’t competition after all.

You see, although the property was renting for considerably less than ours per month, it too made an impression. A bad impression.

It had the original shag carpet that gave off an odour of years of renting, the kitchen was the original 1970’s dark brown cabinetry and it may have been the original sink due to it’s rough look.

It wasn’t inviting, it wasn’t a place a tenant would necessarily be proud of. It was a property that required discounts and incentives just to attract potential viewers!

That’s lesson reinforced the idea that if you present a better product, you attract a better tenant. And it’s also why I don’t offer incentives.