Survey: Best Incentives for Lease Renewal
If you’ve been in the property management business for a while, you know that the best way to save on costs is through tenant retention. However, the renting lifestyle is flexible by nature, and brand-new communities with all sorts of amenities and concessions are coming on to the market each month. How are you enticing your residents to stay? Analysts at Software Advice, a source for property management system reviews, surveyed over 4,500 past and current renters to see what incentives are the most effective in convincing them to renew their lease.
By encouraging residents to renew their lease, you reduce the effort and resources you need to turn over a unit and market the vacancy. Take a proactive approach to incentivize residents to renew by providing perks they actually want.
The #1 Renewal Incentive: Cash.
Cash is king, and it’s no different when it comes to renewal incentives. The survey results showed that 52 percent of residents would be encouraged to renew their lease if they received cash or spendable rewards. Unit upgrades, such as new flooring or a fresh paint job, came in as the second most-preferred incentive with 27 percent of respondents willing to stay. Only 11 percent of residents prefer free services (such as gym membership) or household items.
Rent discounts are the preferred financial incentives.
Residents prefer cash rewards in the form of rent discounts. 58 percent of renters prefer the discount, while 28 percent would rather take cash. However, the type of cash incentive preferred by renters varies by age: 49 percent of renters in the 25-34 age group prefer a rent discount, while 23 percent of renters in the 35-44 age group prefer cash.
The #1 Non-Monetary Incentive: Covered Parking
If you’re not able to provide your residents with monetary incentives to renew the lease, the best non-monetary perk to entice renters to stay is by giving them covered parking. According to the survey results, a free covered parking spot is the cream of community perks, preferred over unit upgrades such as new carpet or updated kitchen appliances. Coming in at second and third place for community incentives are upgrades to a better unit and upgrades to a more energy-efficient unit, respectively.
Timing is Everything.
On top of knowing what renewal incentives are most valuable to residents, you also need to know when to offer them. Renters are most likely to agree to extending their lease if offered the incentives during the initial lease signing (43 percent) or a few months before their lease expires (45 percent). If you offer residents a perk a few months into the lease or when you send out the lease expiration notice, they’re far less likely to respond positively – only 6 and 5 percent of renters, respectively, would renew the lease at that point.
To learn about about renter’s preferences when it comes to off-site renewal incentives and a break down of renewal preferences by gender and age group, read the full report at Software Advice, or flip through the slides below.