Apartment managers are in an advantageous position today–more people are choosing to rent instead of buy, and multifamily construction has grown by roughly 300 percent since 2010, giving renters many more living options should they choose to move at the end of a lease.
So, what can property managers do to make their apartments more appealing to residents and gain an edge over the competition?
Retaining residents is far less costly than finding new ones, so we set out to learn which incentives are most effective in convincing existing residents to renew a lease, and when the best time is to offer these perks.
To find out more, we surveyed a random sample of U.S. adults. We collected about 500 unique responses to each of nine questions, giving us a total of 4,599 respondents. Here, we highlight the biggest takeaways.
- A discount on rent is the most preferred monetary incentive
- Gym memberships and covered parking are the most preferred non-monetary incentives
- The best time to offer incentives is during the initial lease signing or right before a resident’s lease expires
Monetary Rewards Trump All Others
When asked what types of incentives are most likely to entice residents to renew their lease, 52 percent said they could be swayed by cash or other types of spendable rewards (we’ll take a closer look at what these entail in the next section).
Ranked evenly at the bottom for most convincing type of incentives, at 11 percent, are free services (e.g. a free gym membership) or a household item (e.g. a new television).
Of those who chose monetary incentives, 41 percent were aged 25-34, the age range that the majority of renters fall within. To ensure residents in this group continue to renew their lease, you should consider offering them monetary rewards.
A Discount on Rent Is the Most Popular Financial Incentive
Fifty-eight percent of renters said they would prefer to receive a monetary incentive in the form of a rent discount, compared to 28 percent who would simply prefer cash.
A rebate on a security deposit and gift cards to popular retailers were preferred by 10 percent and 4 percent of renters, respectively.
The data found that a cheaper rent payment is preferred by about 49 percent of residents aged 25-34, the highest preference of any other age group.
Kitchen Appliances Favored Over Entertainment Items
Someone is cooking in the kitchen, and it’s probably your tenants. When asked what household goods are most likely to convince them to stay, 37 percent of residents answered with “kitchen appliance.”
There was also a slight difference between the sexes in terms of preferred entertainment option –64 percent of men would choose a television, while 59 percent of women would choose a tablet computer.
New Flooring, Washer/Dryer Are Preferred Unit Upgrades
In contrast to the data on household goods, the desire for kitchen appliances is less prominent when compared to incentives that can significantly improve a living space. Thirty-one percent of residents would rather receive new carpet or flooring, while 30 percent would rather receive a new washer or dryer.
Covered Parking Preferred Over Unit Upgrades
In another close category, 35 percent of respondents said they would be more inclined to re-sign their lease if it came with a free covered parking spot.
Parking is a major factor for those looking for an apartment, so offering a protective covering for a resident’s vehicle along with a more comfortable walk through inclement weather could be just what you need to retain their business.
Value and Convenience Are Top Priorities for Off-Site Perks
As it turns out, some of the best incentives you can offer are those provided by off-site businesses–our survey found that 47 percent of respondents would be likely to renew their lease if they were offered a free gym membership to a local facility.
Lastly, a free car-sharing service was popular with only 11 percent of the respondents, the majority of which were seniors over 65 years of age. Apartment managers should consider providing off-site incentives with high value (gym membership) and convenience (grocery delivery) to convince renters to stay.
Multimedia and Entertainment Outrank Maintenance Perks
As far as offering free services, media services such as cable television and Internet service top the list of incentives likely to retain residents. Forty-one percent of respondents say offering free TV/cable service is the most convincing way to get them to renew.
Meanwhile, 32 percent prefer free Internet, the majority of which fell within the 18-34 age group.
That younger residents are driven by entertainment rewards–rather than cleaning and other domestic chores, is hardly surprising–so property managers would be wise to ensure that incentives are as exciting as they are useful.
Offer Incentives Just Before or During Lease Signing
Now that we know which incentives can convince residents to stay, it’s also important to know the best time to offer them. Just 5 percent of respondents said they’d be convinced to renew if offered an incentive to stay a few months into their lease, while only 6 percent said they’d be inclined to renew if offered an incentive after receiving a move-out notice.
These are the times when residents are weighing every feature and option about their living environment, so tossing in an extra perk, free service or item can be the final nudge a renter needs to stay at your property.
In general, the data shows that residents are mostly likely to respond to incentives that save them money or provide a tangible added convenience. While this isn’t to say that a friendly welcome or remembered birthday isn’t helpful, the perks that go the furthest in convincing residents to renew their lease have immediate recognizable value.