That Dirty, Naughty, Awful "C" Word
I hate the "C" word. I think it should just be banned from existence in the apartment industry.
I mean concession, but if you're using the other bad "c" word on your property, you should probably stop that, too.
The key is moving from concession to incentive. Why are we giving away money off of the rent? I know that it's a tried and true motivator for closing that lease, but "$2000 off your rent" spread through out the terms of a lease is screwing everything up, and let's face it, we don't need to do it!
Am I saying that you shouldn't do a move in special? Are you out of your mind? Of COURSE that's not what I'm saying! I love the Look'n'Lease and I think it's a great idea. I love how well waiving application/security/pet fees and deposits can work, because lets face it, the money from there is just small potatoes compared with the money brought in by rent. Let's get people to the property with an attractive offer and get your community to that coveted spot of 98% occupancy. But let's do it a smarter way and let's do it a way that doesn't jeopardize the renewal at the end of the lease.
Plus, when we give free rent away, as I said in response to an earlier comment with Brent Williams of Apt. Connect, we are basically devaluing the property we have just spent 45 minutes building value in during our leasing presentation. It doesn't make a whole lot of sense.
Take your move in special out of your deposits (with approved credit) or out of your move in fees or even out of pet deposits and fees. OR give the "special" in a form that isn't directly related to the payment of their rent, such as putting it on a Visa Gift Card, or connecting with a moving company in the area and paying for half the cost of the move from one community to another. Depending on where your community is and what size of an apartment you're renting, you are probably STILL coming out ahead on the financial terms because a moving company is going to be under $600 for a cross town move, and that's probably a LOT less than a month's rent. The second option only works for a very localized move in special, but it would work to woo residents away from your competitors, who are willing to give way too much money in free rent, but would never think to offer to pay for the van for their new residents to move...
Or, as I think either (and probably both) Lisa Trosien and Mike Brewer have pointed out, go with "Stuff." One of the most popular rental incentives that we used when I was on site was a chance for winning a free Nintendo Wii. Not the Wii, but just a CHANCE for winning one. We got over 11 leases of that in about three weeks, and that's pretty darned successful in my book. Gen Y renters will be swayed by the material goods, so invest some money in some Ipod Nanos and get them moved in. Yes... it's more valuable to take that deal with the three weeks free rent down the street... but here, I get the IMMEDIATE GRATIFICATION of an Ipod Nano. No one really does the math on these things, and that leaves a great opportunity for anyone with a smidgen of marketing knowledge.
Plus it never sets you up for having to give a concession to an unhappy resident, because they've never received one before. Not to mention saving the renewal argument of "Why do they get a month free and I don't? I've been here longer, shouldn't I get something, too?" (Though, personally, I think you should treat your renewals even better than your new move ins because they're saving you that average $1700 cost of turning and re-renting the apartment.) Also, if that resident had their concession spread through the term of the lease, then your renewal might be WAY above where their affordable price range is now. Can you talk them in to it? Probably. Does it put you at a higher risk for those folks ending up paying late, getting evicted, etc? Most likely. Instead, if we had just waived deposits or fees at move in time or gone with the route of immediate gratification via "stuff," they would have moved in based on the cost of the rent for that apartment WITHOUT any extra off, and they would probably be able to renew happily with us, as long as we were on our game with resident retention.
Am I crazy? Maybe a little. Am I right? What do you think? Talk to me about move in incentives. What are your best ones, what works, what doesn't and how can we get away from a rent concession as an incentive?
I mean concession, but if you're using the other bad "c" word on your property, you should probably stop that, too.
The key is moving from concession to incentive. Why are we giving away money off of the rent? I know that it's a tried and true motivator for closing that lease, but "$2000 off your rent" spread through out the terms of a lease is screwing everything up, and let's face it, we don't need to do it!
Am I saying that you shouldn't do a move in special? Are you out of your mind? Of COURSE that's not what I'm saying! I love the Look'n'Lease and I think it's a great idea. I love how well waiving application/security/pet fees and deposits can work, because lets face it, the money from there is just small potatoes compared with the money brought in by rent. Let's get people to the property with an attractive offer and get your community to that coveted spot of 98% occupancy. But let's do it a smarter way and let's do it a way that doesn't jeopardize the renewal at the end of the lease.
Plus, when we give free rent away, as I said in response to an earlier comment with Brent Williams of Apt. Connect, we are basically devaluing the property we have just spent 45 minutes building value in during our leasing presentation. It doesn't make a whole lot of sense.
Take your move in special out of your deposits (with approved credit) or out of your move in fees or even out of pet deposits and fees. OR give the "special" in a form that isn't directly related to the payment of their rent, such as putting it on a Visa Gift Card, or connecting with a moving company in the area and paying for half the cost of the move from one community to another. Depending on where your community is and what size of an apartment you're renting, you are probably STILL coming out ahead on the financial terms because a moving company is going to be under $600 for a cross town move, and that's probably a LOT less than a month's rent. The second option only works for a very localized move in special, but it would work to woo residents away from your competitors, who are willing to give way too much money in free rent, but would never think to offer to pay for the van for their new residents to move...
Or, as I think either (and probably both) Lisa Trosien and Mike Brewer have pointed out, go with "Stuff." One of the most popular rental incentives that we used when I was on site was a chance for winning a free Nintendo Wii. Not the Wii, but just a CHANCE for winning one. We got over 11 leases of that in about three weeks, and that's pretty darned successful in my book. Gen Y renters will be swayed by the material goods, so invest some money in some Ipod Nanos and get them moved in. Yes... it's more valuable to take that deal with the three weeks free rent down the street... but here, I get the IMMEDIATE GRATIFICATION of an Ipod Nano. No one really does the math on these things, and that leaves a great opportunity for anyone with a smidgen of marketing knowledge.
Plus it never sets you up for having to give a concession to an unhappy resident, because they've never received one before. Not to mention saving the renewal argument of "Why do they get a month free and I don't? I've been here longer, shouldn't I get something, too?" (Though, personally, I think you should treat your renewals even better than your new move ins because they're saving you that average $1700 cost of turning and re-renting the apartment.) Also, if that resident had their concession spread through the term of the lease, then your renewal might be WAY above where their affordable price range is now. Can you talk them in to it? Probably. Does it put you at a higher risk for those folks ending up paying late, getting evicted, etc? Most likely. Instead, if we had just waived deposits or fees at move in time or gone with the route of immediate gratification via "stuff," they would have moved in based on the cost of the rent for that apartment WITHOUT any extra off, and they would probably be able to renew happily with us, as long as we were on our game with resident retention.
Am I crazy? Maybe a little. Am I right? What do you think? Talk to me about move in incentives. What are your best ones, what works, what doesn't and how can we get away from a rent concession as an incentive?
Great article and I agree with you completely, Heather. My other post had to do with the reality of communities giving away concessions rather than the actual business sense in doing it.
Also, in a prior life, I worked with an incentive company whose sole purpose was to create incentive programs for companies. They said that giving actual products away was MUCH MORE powerful than cash. Cash gets spent on bills and other random nonessential things and gets forgotten. A good product however provides much more residual value as they think of the community every time they use it. And it can be shown to their friends, which ends up being a referral tool as they inevitably say they got it by moving into your community. I can still remember the little stereo I won when I was probably 12 years old by selling stuff door to door. I would never have remembered if I had gotten cash.
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I thought about this the other day...
What about a savings account/preferably a CD opened in their names with $100 in it so that it grows in interest with their residency? With all the push to "savings smarts" it might be something to try to tap in to...
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I 100% agree, go with the stuff all day long. Gift cards are awesome especially if they are geared toward places they can buy things to personalize their space. That or places they can exercise a guilty pleasure. By that I mean buying that iPhone that they would never buy otherwise.
Love the post H, keep up the great work and thank you for the kind mention. M
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I hear IKEA does a lot of partnerships giftcard wise if you have one near you, Mike. They're pretty great for university district properties.
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