The pandemic has changed renter behavior in big ways. Tenants are less apt to move -- particularly in areas hit harder by the virus. When faced with the option to renew their existing lease or chance exposure and move, many tenants are choosing the former. Plus, there are the economic challenges that come with a new property -- the security deposit, moving costs, application fee, and more. And with many renters suffering job loss or work-hour rollbacks, the premise of moving is just too expensive now. As a result, landlords are making concessions to get tenants in the door, offering discounts on rent, hefty gift cards, fee waivers, and more.
Are you having a hard time filling a vacancy? Should you consider a concession? Here's what you need to know.
6 popular landlord concessions during the pandemic
According to a new report from Rental Beast, landlord concessions have been on the rise since the pandemic began. In Boston, for example, concessions are up 176% year over year in October.
One of the most popular concessions is free rent -- usually for one, two, or even three months in some cases. Other concessions include:
- Application, pet, parking, and administrative fee waivers, allowing tenants to apply for free or skip pet deposits/fees.
- Look-and-lease rebates, giving tenants up to $1,000 in cash if they lease within 24 hours.
- Landlord-paid broker fees, for tenants who are represented by agents.
- Gift cards.
- Complimentary gym memberships.
Concessions tend to be more common when tenants agree to longer leases (13 months or more) or when a unit has been left vacant for a few months.
Should you offer concessions?
Concessions are definitely getting more popular, but they're not the norm in every market. In Atlanta, for example, concessions have actually dipped 70% year over year as of October.
Before you decide to throw in a few months' free rent or waive those application fees, make sure you have a good handle on your market, as well as where local demand is at. Also ask yourself:
- How long has the unit been vacant?
- Is my rent in line with other comparable units?
- How much will I lose if the unit sits vacant another month or two?
- How many other similar properties are available in the area?
In some cases, it may be better to lower your rent slightly than throw in too many concessions. For example, charging $100 less per month will cost you less than throwing in two months of $1,000 rent for free.
The Millionacres bottom line
Landlord concessions can be a good way to get tenants in the door, but they're not your only option for filling a vacancy. If you do decide to make some concessions, be extra diligent in screening your tenants, and make sure they have consistent income, good credit, and can be relied on to pay their rent -- especially once those "free" rent months run out.