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Your initial goal as a rental property owner is to find quality tenants for rental income, and then work towards tenant retention for cash flow stability. Nashville will soon see a competitive rental market, despite a 10% drop in multi-family construction spending from 2023 to 2024.
Housing Inventory Increase in Nashville
The Music City's economy continues to grow in 2025, and an increase in housing options is already expected. Many of the new listings are new-construction units, and whether or not they're the most appealing option, more rentals can certainly affect rent prices in the area.
With rising supply meaning more competition, even the smallest incentives can make all the difference to reduce turnover and find new tenants. Learn ways you can keep up with the shift in the rental market with a strategic approach using incentives.
Lease Incentives for Existing Tenants
1. Rent Reduction or Discount Upon Renewal
One good way to encourage lease renewals is to offer incentives like rent discounts or reduced rent. This can even serve as a reward for quality tenants who always follow lease terms. The discount can be between 5% to 10% of the rent amount, although it can depend on short and long-term leases. The same goes for lowering rent, as long as it doesn't lead to a negative cash flow.
2. Property Improvements
Existing tenants may have rented the place with the current decor and amenities, but that doesn't mean that new rentals won't pop up with better offers. The key to retaining tenants is not just regular property maintenance; it's also keeping up with the competition. You can either upgrade amenities, such as adding smart home features, or conduct cosmetic changes to increase property value.
3. Flexible Lease Terms
Another way to make tenants feel valued is by providing flexibility with their lease agreements, particularly the lease term. You may use this to reward tenants, especially quality renters who have been renting long-term. Flexible lease terms can be fixed, or you can let your tenants negotiate what the new terms will be.
4. Utility or Amenity Credits
Rewarding tenants with a free month of access to amenities or utilities can also be a great lease incentive, as it helps tenants save money. Keep in mind that while it does enhance tenant satisfaction, it is not sustainable to offer this to all your current tenants, especially with monthly lease terms.
Lease Incentives for New Tenants
1. Gift Cards or Baskets
You can create a welcoming environment for your new tenants by providing a gift card or a gift basket with the amenities they need to settle in. It doesn't make a big splash in a competitive market, but it shows your tenants what kind of treatment they can expect moving forward, and not just efficient property management.
2. Pet-Friendly Perks
If you run a pet-friendly property, offer pet-related incentives like discounted pet deposits, access to amenities, or gift cards for pet stores. Being a pet-friendly property alone can help you fill vacancies faster, but tenants would appreciate it more if you also consider the well-being of their furry friends.
3. Move-In Assistance
Helping your tenant move in is not a part of your property management tasks, but you can offer assistance in ways like providing an allowance for moving costs, free truck rental, professional cleaning service, or other forms of help settling in. These simple conveniences can easily make your property stand out among the rest.
4. Local Business Perks
Lease incentives can also be given through perks for local stores, which you can arrange by partnering with cafes, gyms, dry cleaners, or grocery stores. Lease incentives like discount vouchers can help build community engagement around your property, which can increase word-of-mouth referrals.
What Else Can I Do To Improve Tenant Appeal and Retention?
Obviously, you cannot rely on tenant incentives alone. If you want to keep reliable tenants and attract renters, you have to do more than offer free rent or discounted parking. The bottom line is that tenant retention can be achieved through efficient property management.
Your renters want maintenance and repairs to be done on time, and expect you to address concerns they might have. Incentives are one-time things that renters won't appreciate for long, whereas good property management is something they will always be grateful for, and is the key to long-term success.
Think about ways you can do so effectively, such as using property management software, asking fellow landlords for guidance, or hiring professional property management services. Anything that may contribute to tenant retention or boost tenant satisfaction.
What tenant incentives are not recommended?
- While helping tenants reduce housing costs can be an effective strategy for tenant retention, you also have to think about your profitability and protection. A waived security deposit, for instance, leaves you with costs you shouldn't have to cover.
Which tenant incentives can help attract tenants?
- Other than the basic ones like gift cards and access to amenities, you can provide rewards for "extended marketing," such as referral bonuses. This will encourage current tenants to refer friends or find other renters for your property.
Can I still retain and attract tenants without incentives?
- Yes. Incentives are only used to stay competitive in a growing market. You won't have to worry about tenant turnover when you run smooth operations. As for attracting tenants, your property can speak for itself, as long as you know how to market it right.
Should I offer different incentives to various tenants?
- Yes. Better benefits should be provided to tenants with longer leases. Flexible options for lease terms and access to amenities are good examples. This could incentivize renters with month-to-month leases to try long-term tenancies instead.
Tackling Key Improvements with Professional Property Management
As mentioned before, landlords can use incentives to reduce vacancy time and retain existing tenants, but the top priority should still be effective property management. It generally guarantees better ROI and long-term benefits.
With the tasks being time-consuming and tedious, a property manager can help you with the daily tasks required of a landlord. You'll remain a stress-free property owner and earn passive income. It's a win-win situation that Green Tree Property Management can help with.
Contact us, and we can help you keep happy tenants and find reliable renters.
