A move-in incentive is generally something that motivates a potential tenant to move into your rental property. The same applies to those already leasing your property; a move-in incentive can be something that motivates them to renew their lease with you. These incentives are essentially bonuses or discounts for living in your home.
The question remains however, just how effective are move-in incentives for placing long-term tenants in your rental property and is this a practice you should follow?
Although move-in incentives are seemingly a great option for many landlords looking to rent their Anne Arundel County homes, there are more beneficial ways to appeal to potential or current tenants.
Today we will make a case against move-incentives by showing you the problems that can arise from offering them in an effort to lease your home.
There are certain things that can affect whether a landlord is able to offer move-in incentives to potential or even existing tenants.
- If the market is saturated with available homes, you may be more apt to offer move-in incentives to potential tenants to get ahead of the competition and prevent a lengthy vacancy. Though in a place like Annapolis the demand for rental homes is currently high, a drop in population growth can affect this competitive market easily.
- If a tenant with high income and superior credit is interested in leasing your rental home, you may be more willing to offer an incentive to get them to sign the lease. This is the case for tenants residing in Fort Meade as they are more likely to hold stable and highly paid positions due to the nationally scaled industries.
- If you are financially secure and rental income is considered supplemental income to your primary sources, you may be more flexible in offering incentives to the right tenant.
Types of Move-in Incentives
It is not surprising that the best times to offer move-in incentives are at the initial lease signing or right before a tenant’s lease agreement is up.
Let’s take a look at some of the most common move-in incentives you may be tempted to offer potential or current tenants and why they may actually pose more of a problem for you in the long run.
Reducing the first month’s rent is a popular and long-standing way to attract potential tenants.
However, if this is offered at the start of a lease agreement, it has the potential to make the impression that you actually can afford to lower the monthly rent that is being asked for. This may cause the tenant to question your asking rent amount. In addition, should they take the incentive and move in to your home, they may remember this incentive at lease renewal time and ask for a lower rental amount knowing your pocket can probably handle it.
Rather than offering the standard first month’s rent reduction, you may want to give tenants a gift certificate to the grocery store, hardware shop, or restaurant in order to get a lease signed.
Although people generally like the idea of free things, and are often motivated by them, the real reason a person is renting your home is not because they received a gift card. Rather it is because of things such property location, home layout, and surrounding area amenities like job opportunities and good schools. In fact, it is reasons such as these that tenants are going to want to rent in Severna Park.
Gift certificates do not make your rental home more appealing, and it probably won’t sway someone to move into a place they are not 100% happy with. If a tenant moves into your home that is not their first choice, they may not care for it as well, are less likely to renew, and may cause problems later on.
In addition, 58% of people say they prefer lower rents rather than cash. The reality is, if your home is not what a tenant is looking for, chances are they will not rent from you based on a $100 gift certificate.
Lowering the asking rental price in order to seal a deal with a potential tenant is also a tempting incentive to offer.
Though a $25 or $50 decrease in monthly rent is definitely enticing to any tenant, this is really just a way for a landlord to prevent a vacancy.
While the tenant may take the deal, it is often because your lower price simply fits their budget better. The problem will come later on at the end of the lease agreement, when it is time to increase the rent to a price you find more fitting.
This will be is risky, especially in places such as Laurel where long-term tenants are found. The tenant may be accustomed to the lower rental amount and may not want to renew at a higher price. You will then be left to find another tenant.
Lease Renewal Incentive
Lowering the rent at lease renewal time is the most successful move-in incentive to date. Another common incentive some landlords like to provide is a surprise refund of part or all of the first month’s rent or another reward of some type, such as a gift certificate.
The problem with this is that the tenant usually does not expect these types of incentives and may again think that the original asking price for rent is simply overpriced since you can obviously afford to make refunds or give rewards.
This may show to be true in a highly coveted place such as Glen Burnie. Tenants typically know the current market prices of homes in the area they hope to live in, and knowing that an expensive Glen Burnie home is going to come with a high rental price to begin with may dissuade them from continuing to rent from you.
Come next renewal, they may simply leave thinking they can find a better deal elsewhere from the start rather than waiting for the end of the term to reap the incentive reward.
Better Ways to Attract Quality Tenants
The truth is, though some of those move-in incentives may work initially, in the long run there is the potential for many unforeseen issues that will cause you a headache when it comes to placing or even retaining tenants in your rental property.
Here are some better ways to attract and keep quality tenants in your investment property that will not force you to wheel and deal with various move-in incentives:
- Present curb appeal – Make the outside of your home inviting and beautiful.
- Include all appliances – Rather than offer them as “bonus incentives” for signing a lease agreement, offer them as part of the home.
- Take care of the interior – Make small repairs, such as freshly painting the walls, cleaning or replacing flooring, replacing fixtures, providing window coverings, making sure all light bulbs work.
- Have a great property management group to handle everything that goes into leasing your home – This includes things like proper tenant placement, legally compliant lease agreements, 24 hour maintenance, routine inspections, timely rent collections, and great tenant communication.
There is much more to attracting quality tenants to your Anne Arundel County home than simple one time move-in incentives.
Tenants want rental homes that make financial sense, are in prime locations, are surrounded by several amenities, are in close proximity to good job opportunities, and so much more. They tend to make decisions based on their first impression of the property they want to call home. If it does not provide all of the qualities that they are looking, offering an incentive will not convince them to lease from you, and you will be facing a very empty rental home.