Real Estate Investments - Offering Perks to Potential and Current Tenants
In a soft rental real estate market where vacancy rates are high, tenants can afford to be picky while landlords have to offer incentives and perks in an attempt to attract and retain tenants.
These are often called "concessions.
" If you own rental property and are considering offering perks to tenants, keep reading for ideas and a breakdown of whether those investments will actually be worth it.
A Month's Free Rent You'll often see property advertisements offering one month's free rent to prospective tenants who sign a one-year lease.
Let's consider a unit where the rent is $1000 per month, meaning it typically provides $12,000 per year in rental income.
Reducing that by one month means it now provides $11,000 per year.
That means the rental rate or income is now only $916.
17 per month.
If you're considering offering a month's free rent, try increasing your monthly rate at least marginally to offset that profit loss.
Free Utilities Free utilities can be a great way to attract tenants looking for an all-inclusive deal.
Before you jump on the utilities-included bandwagon though, make sure you fully research the annual average electric, water and heating bills.
With today's cost of gas, utilities can be a significant monthly expense.
If you don't have those figures for your property, contact your local utility companies and ask for estimates based on previous billing cycles.
In addition, some hydro companies offer flat rates based on the property's historic average power usage.
This can be a simple way to budget for utility costs.
Washer and Dryer An in-unit washer and dryer is a big selling point for potential tenants.
Unfortunately, it can also drive up utility costs.
Consider this option if you're renting a unit where the tenant pays the water and electric bills.
Otherwise, install coin-operated laundry.
Free Parking If your parking is only netting you about $20 to $40 a month from tenants, it may be a loss worth taking to offer free parking to tenants.
However, don't get yourself into a position where remaining tenants are paying for parking while new tenants are receiving it for free.
You could wind up losing quality, long-term tenants.
Free Internet Because wireless networks are so simple to set up and operate, this can be a great incentive that's easy to implement.
Remember though, you don't want to be an Internet Service Provider having to handle technical issues, so let tenants know that the service is there, but it is not a guaranteed service for function or quality included in the lease agreement.
These are often called "concessions.
" If you own rental property and are considering offering perks to tenants, keep reading for ideas and a breakdown of whether those investments will actually be worth it.
A Month's Free Rent You'll often see property advertisements offering one month's free rent to prospective tenants who sign a one-year lease.
Let's consider a unit where the rent is $1000 per month, meaning it typically provides $12,000 per year in rental income.
Reducing that by one month means it now provides $11,000 per year.
That means the rental rate or income is now only $916.
17 per month.
If you're considering offering a month's free rent, try increasing your monthly rate at least marginally to offset that profit loss.
Free Utilities Free utilities can be a great way to attract tenants looking for an all-inclusive deal.
Before you jump on the utilities-included bandwagon though, make sure you fully research the annual average electric, water and heating bills.
With today's cost of gas, utilities can be a significant monthly expense.
If you don't have those figures for your property, contact your local utility companies and ask for estimates based on previous billing cycles.
In addition, some hydro companies offer flat rates based on the property's historic average power usage.
This can be a simple way to budget for utility costs.
Washer and Dryer An in-unit washer and dryer is a big selling point for potential tenants.
Unfortunately, it can also drive up utility costs.
Consider this option if you're renting a unit where the tenant pays the water and electric bills.
Otherwise, install coin-operated laundry.
Free Parking If your parking is only netting you about $20 to $40 a month from tenants, it may be a loss worth taking to offer free parking to tenants.
However, don't get yourself into a position where remaining tenants are paying for parking while new tenants are receiving it for free.
You could wind up losing quality, long-term tenants.
Free Internet Because wireless networks are so simple to set up and operate, this can be a great incentive that's easy to implement.
Remember though, you don't want to be an Internet Service Provider having to handle technical issues, so let tenants know that the service is there, but it is not a guaranteed service for function or quality included in the lease agreement.