Key Takeaways
- Use incentives strategically: Offer promotions to reduce vacancies without sacrificing long-term rental income.
- Know your market: Evaluate Roanoke rental demand, competition, and pricing before offering discounts.
- Balance value and profitability: Choose incentives that attract quality tenants while protecting your investment returns.
Renting out a property is one of the biggest responsibilities of landlords. The presence of an empty property not only signifies an empty unit, but it also brings loss of rental income, maintenance costs, utilities to pay, and even attracts unwanted attention.
Thus, in a very competitive real estate market like the one in Roanoke, Virginia, landlords use different approaches to keep their units rented out as fast as they can. One of these methods is to give tenants deals or discounts. This, however, does not mean that discounts and offers must be given because the owners are trying to fill the vacancies as quickly as possible.
When considering promotional offers, a landlord should think from every angle by taking into account the current market conditions, the competitive situation of his property, the demand for his particular type of rental property, and the financial consequences of any promotion offered. Well-planned promotions can help reduce the vacant periods and find good tenants.
Keep on reading this guide by JMAX Property Management to learn more about offering a deal to find new tenants for your Roanoke, VA rental property.
Assessing the Roanoke, Virginia Rental Market
Since it is affordable, has jobs, and has beautiful nature and ambiance, Roanoke is gaining popularity among different categories of renters.
Even during stable rental market conditions, it is likely that property owners will enter into competition with one another to see who can fill up their rental property. A landlord who is finding that the property has been vacant for too long may consider whether lowering rents or giving incentives would help.
The first thing that needs to happen is to figure out if the vacancy is due to high rent, lack of promotion, poor condition of the property, etc. If someone is thinking of giving any type of incentive, it should be to solve a particular problem or challenge faced, rather than trying to cover up a matter that needs fixing.
How Do Rental Incentives Work?
When making a choice between several potential rentals, many tenants weigh all their options carefully before making an ultimate commitment. Even if two rentals are very similar in terms of their features and rental rates, a little something extra in the form of rental incentives can often convince prospective renters to pick one of those properties instead.
Rental incentives can help renters perceive that the cost of moving is lower than what it actually is. This makes sense considering all the expenses (first and last month’s rent plus security deposit, moving costs, utility connection fees, and application fees) that renters incur when relocating from one home to another.
A good rental incentive can teach a tenant the value of a property without affecting long-term income by reducing monthly rental rates.
In fact, owners benefit from the rental incentives through reducing vacancies, which more than offsets the costs associated with these incentives, getting them an ideal tenant in no time, whereas losing a whole month’s rent while waiting does not make sense.
Incentives to Attract New Tenants
Not all offers should rely on the traditional model of rent reduction. There are several instances where promotional incentives can create a strong appeal for prospective tenants without damaging the bottom line. Common promotional incentives include the following:
- First month of free rent with a lease of 6 months or longer;
- Lower deposit for tenants who qualify
- No application fee
- Rent-free parking for a certain time
- Free storage for a limited time
- Free internet for some months
- Gift cards to local merchants
- Flexible move-in time
- Reduced pet fees
- Cleaning of the premises before the tenant’s arrival
It is important to note that such promotions can be directed toward various demographics of tenants without adversely affecting the annual rental revenue.
When to Offer an Incentive
Promotions are particularly appropriate in some situations. Some of them include:
- Extended vacancies
- Seasonal slowdowns
- Increased local competitions
- New rental listings
Circumstances in Which Discounts May Not be Necessary
It is not always appropriate to provide a discount. In instances where a rental property has multiple qualified applications in a short time span, lowering rent or providing some other special financial incentive may create collateral negative effects regarding profit.
Similarly, there are times when properties do not rent with discounts; that is, the rental value is the same with or without the discount.
Questions to consider in determining whether or not a discount is necessary include:
- Do the listing photographs look professional?
- Is the description of the property thorough and complete?
- Is the rental price in line with the market?
- Is the property clean and presentable?
- Are maintenance issues handled in a timely fashion?
- Is the showing process going smoothly?
In some cases, upgrading marketability could yield better results than reducing the rental price.
Financial Implications of Offering Discounts
Every discount offered has financial implications. Landlords must also consider:
- Mortgage payments
- Property taxes
- Insurance
- Maintenance expenses
- Utilities
- Property management costs
- Vacancy reserves
Having a full understanding of the financial situation is important so that incentives have a positive effect on the overall performance of the investment.
Be Careful Not to Create Unrealistic Expectations
The downside of offering incentives is that it creates a perception among future tenants. If an advertisement always includes a big discount, it will cause customers to postpone making an application or signing a lease.
It could also result in existing tenants expecting the same types of discounts when renewing an agreement. To avoid that situation, it is essential to provide enough information in the advertisement concerning:
- Eligibility requirements
- Expiration date
- Terms and conditions
- Move-in date
- Any fees associated with the offer
Bottom Line
When implemented strategically and responsibly, using deals as part of a marketing strategy can be an effective way to increase occupancy rates at a rental property in Roanoke, VA. Deals can help shorten vacancy periods, boost sales, and encourage prospective tenants to take action.
The key here is that incentives must complement, rather than substitute, great pricing, good marketing, property upkeep, and proper tenant screening. The most successful rental properties use a mix of attractive pricing, good showing, prompt responses, and appropriate promotions. Contact JMAX Property Management today to learn more!
