You’ve probably seen ads offering reduced rent, free rent, or other discounts to tenants for the first month. Discounts are a central part of marketing and if you can offer a deal, why not?
While good rent deals will attract potential tenants, you’ll inevitably attract people with money problems. That doesn’t mean you shouldn’t offer deals, but you’ll need to be strategic and extend your deals beyond rent reduction.
Be intentional with the words you use to describe your deals. For example, avoid using words like ‘cheap’, ‘free’, ‘bargain’, and ‘discount’. Instead, use words like ‘complimentary’, ‘bonus’, and ‘reduced’.
Say you want to offer $400 off the first month’s rent. An ad that reads, “First month’s rent will be discounted by $400” sounds normal, but the word ‘discount’ makes it sound like a bargain bin deal. A more powerful choice of words is, “First month’s rent will be reduced by $400.”
The difference is subtle, but important. For many people the word ‘discount’ is subconsciously associated with lower quality bargains and, therefore, might attract the wrong people.
If you want to use incentives to attract potential tenants, you’ll need to look beyond rent deals. There are many types of discounts, but not all are applicable to real estate. For instance, you could offer the second month’s rent free and call it a “Buy One, Get One” (BOGO) deal, but that would be awkward.
Make sure you offer incentives that make sense to tenants and provide value where it matters. Here are some examples of tenant-appropriate incentives:
Never offer to reduce or eliminate a tenant’s security deposit. It’s not so much about the money but the mentality behind not having to pay a security deposit.
For example, say your security deposit is normally $600. Any standard incentive might cost you that much (or more). However, allowing people to avoid paying a security deposit can make them feel like they don’t have to be as careful. For instance, when a tenant makes a $600 security deposit, they have “skin in the game” so to speak. There is something at stake for them. They know they’ll lose that money if they destroy the property or don’t pay the rent.
On the other hand, if there’s no promise of a $600 refund at the end of their tenancy, a tenant might not be too concerned with preventing damage. At the end of their tenancy, they might walk away from damages and refuse to pay you for the cost of repairs. If the damage costs less than $500 to fix, you may not be able to take them to court, or it could be more hassle than it’s worth. In that situation, you’ll not only have to pay for the damage, but you’ll have to spend time dealing with it.
The other problem with discounting or eliminating a tenant’s security deposit is you’ll have nothing to use to offset unpaid rent. According to the Texas Property Code, a Texas landlord can deduct unpaid rent from the security deposit. If your tenant skips out on you and doesn’t pay rent – or worse, forces you to evict them – you’re going to lose a lot of money and you’ll have no source from which to recover your costs.
If you’re not sure how to attract new tenants, we can help. Our experienced team at Green Residential knows exactly how to attract, screen, and qualify the right tenants for your property.
We are real estate marketing experts who know what tenants want. If you’re tired of struggling with your own marketing, contact us today for a free analysis to see how we can help you attract the kind of tenants you deserve.
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