By Tali Wee of Zillow
Competition among landlords is rising as the rental market continues to thrive. The demand for rental units increased again last year, as foreclosed households and new families entered the rental market. The rise in demand caused an increase in the cost of rent, with a national increase of 4.2 percent 2012. Higher prices and demand require landlords to get creative to compete for the type of long-term, responsible tenants they all desire.
Landlords should begin by identifying their ideal tenants, evaluating the common needs of those candidates and focusing their marketing efforts to appeal to that target audience. Consider that responsible tenants generally want dependable, trustworthy and organized landlords. They want to live in clean, safe and well-kept properties. Generally, students need access to the university and library, city workers need to be within close proximity to the city center or public transit and families need dining rooms and great local schools. Landlords should boast about their units’ qualities that align with the desires of their model tenants and include statistics and pictures to back up the statements. All of the unit features and amenities should be advertised with verbiage specifically aimed at their target audience.
Advertisements should be placed in areas within the community where the target audience will likely see the ads. Landlords should take advantage of free online listings on craigslist, HotPads and Zillow. Ads should list unit features, such as the number of bedrooms and baths, but should also detail the unit-specific benefits of a welcoming home such as a beautiful view or tons of natural light.
Landlords should compare their units’ features with local, comparable prices. Some city-centered locations or luxurious units are worth expensive rents, but many renters are looking for a good deal because they are unable to afford a mortgage. Though prices rose nationally, tenants want to get what they are paying for. New carpet and appliances are worth higher prices. Landlords should be fair and competitive with their pricing in order to fill their vacancies quickly with quality tenants.
Renters love concessions regardless of the property’s price-range or locale. To be competitive in the rental market, landlords need to find a way to stand out from nearby availabilities. Here are four concession ideas to stimulate interest in vacant units.
1. Provide Free Internet & Cable Services
The concession of Internet and cable is a huge cost-savings for tenants, especially for single individuals. It’s tough to afford the steep prices of Internet and cable on an average salary when the bill isn’t divided between roommates or multiple incomes. When tenants have to organize all of the craziness of moving, it can be a major relief to avoid the installation scheduling and fees associated with these services. If tenants prefer a more personalized service with a faster connection or DVR then they can certainly set that up separately. Landlords can work this cost into the price of rent while making it come across as a more beneficial deal.
2. Promote Amenities
Another way to stand out from competitors is to promote unique amenities that boost interest in the property. If prices and properties are similar, tenants will likely select the option with additional amenities such as a pool, gym or courtyard with a barbeque. When prospective tenants narrow down their options they are likely to remember an unusual amenity such as a complimentary tanning bed or theater room. These amenities can be expensive to build and maintain for landlords. If the property has several units, then the wide appeal will keep the units full, creating a valuable return on the investment.
3. Supply Transportation Assistance
All tenants need transportation. Landlords can appeal to this need with a range of offers. If the property has several open parking spaces, the landlord can offer a free parking space for the length of the lease or for a few months. Tenants may also appreciate a reduced parking price for areas with competitive parking prices. Another offer is to provide new tenants with a prepaid public transportation pass, or unlimited local transit pass, for the first three months. Some properties with multiple units can offer a shuttle a few times per day from the property to the nearest transit hub and back. Depending on how much money the landlord is willing to spend, any of these options could draw a tenant away from a competitor.
4. Offer Move-In Cost Reductions
The expense to begin a new lease and the costs of moving can be overwhelming for renters. They are often expected to pay the first and last month’s rent in addition to a damage deposit. Landlords who have units to fill can use that initial cost burden to their benefit. They can offer the first month rent-free to relieve a portion of the moving expense and to outshine their competitors. This is generally not the direction that a landlord initially wants to go, but it will certainly draw attention. Another way to eliminate that move-in cost is to not collect a damage deposit. Landlords will still bill the renter for any damages once their lease is up, but the initial costs will be reduced at no expense of the landlords’ income.
Once landlords have reeled in their prospective tenants with these concession offers, they should present themselves and their properties in the best form possible. First impressions make an influential impact. Make sure the lawn is groomed, the building looks updated and the space is clean and organized. Landlords should dress and behave professionally while treating prospective tenants respectfully. If ads are directed at the ideal tenants with fair prices, appealing features and amenities and concessions, and the landlord presents the property with pride then units will be successfully filled.
Statistics collected from Zillow’s fourth quarter Real Estate Market Reports by Chief Economist Stan Humphries.