The modern renter wants something to show for all the money they’ve spent on rent. This is especially true in markets where buying homes doesn’t come inexpensively. If people can’t afford to buy, they still want to feel like they are making some sort of investment with the money they shell out for rent each month.
But what exactly does this ROI look like, when the renter is not the owner?
As a property owner or manager, it’s time to start thinking “bigger” and more creatively when it comes to the package you’re offering the renter, because it’s what renters want, and, at the end of that day, meeting renter expectations is what matters most. It helps stave off competition and attract and retain the best tenants – the key ingredients to success in property management.
Concessions are hot right now; so hot, in fact, that in many major metro areas in this country tenants might even be given two free months of rent toward any new lease that they sign. It’s a great perk, but it’s not the same thing as ROI.
One offering that is becoming more popular is in the form of appliances or tech products. An easy way to give tenants ROI is to incorporate language into the lease agreement that gives renters the opportunity to take specific appliances with them after their lease ends. That might be a state-of-the-art smart fridge or a new dishwasher– the appliance can be almost anything that can be moved out of the unit to another home. That is a huge value-add to tenants who may be considering buying a home of their own after a few years.
Now, while every business has a different capacity or resources for what they can offer in term of renters “owning” apartment furnishings or appliances, sometimes it takes money to make money (or to close a lease agreement in this situation). Beyond big appliances, for a more modest ROI, property management teams might want to offer a consumer tech product, like an Amazon Echo, that renters can then take with them after the end of their lease.
No matter what the item is, it should be an item that renters might not have invested in on their own. This factor can often tip the scales and make the rental investment worthwhile to prospective tenants. However, this type of ROI doesn’t always have to be along the lines of something tangible like an appliance.
There are plenty of other ways to give renters the feeling that they are truly paying into something that doesn’t just disappear. Offering free classes or discounts to local groups, clubs and gyms classes are a strong way to attract renters and deliver ROI on the money they’re spending with you on their apartment. So, for every lease completed and re-signed, renters automatically get something – for example, a six-month free membership to a local gym. The more years leased, the more months the gym membership is paid for every year.
This kind of ROI is more than just a one-time incentive. It could be more of a stacked ROI, where the investment tenants make by resigning a lease year after year grows the longer they stay. It’s kind of like the reverse of tangible ROI, but it could promote more longevity in tenants.
Where to Start? What’s in Store for Future?
The biggest thing to consider when making a determination for what kind of ROI you want to offer your tenants and prospective tenants is to know your audience. Are they young Millennials who are into things like high-tech consumer products? Or are they an older group who might benefit more from another type of investment, like a discount on childcare?
The next thing that is important to identify is what resources are available to making ROI for renters a reality, and what the cost-benefit analysis is? Is buying a bunch of new appliances too much of a cost, or is it a small enough sum overall that will lead to 5x better retention and cut down on advertising costs to fill empty units, making it worthwhile? Are investing in less expensive consumer tech devices a better answer for your business and enough to tip the scales for getting a renter to sign? Whatever a business decides to give up as a form of ROI, it has to make sense from a cost perspective.
Finally, especially if going for the less tangible forms of ROI, make sure to personalize. Tenants and prospective tenants love to know that their needs and interests are not lost among the landlord or property management team. Don’t offer a young, female renter ROI in the form of yoga classes unless you know this person actually likes yoga classes. People like ROI, but not in things they don’t value.