apartment concession
Employee Rent Concessions
This week we are rounding out our budget concession discussion with the topic of employee concessions. People are the difference that make a difference in property management. I would argue that it is not location location location but rather people people people that make or break the present and future value of an asset. You can have the best location on planet earth with the worst people and you are guaranteed sub-par valuation. Relocate that asset to a B+ location and team it with A+ characters and you will have yourself a winner. It really is all about the people. And, employee rent concessions are one way of saying thank you.
Value in Responsive Service
Beyond the concept of reward, concessions can be looked at as incentive for an employee to live on-site. There are clear advantages to owners when an employee lives on-site. It lends well to responsive customer service, especially if that employee works on the service side. As an example, if you have an A/C go out after hours, he/she can provide rapid and responsive service. If you provide lock-out services; the idea of rapid response is a real plus. In the event of a major crisis, employees living on-site can act as first responders in the way of organize and deploying crisis management protocols.
Things to Think About
I have seen this amount vary over the years and is certainly subject to ownership or property management protocols. It typically ranges from 15% to 100% and is credited monthly over the course of a lease term. It also typically carries a caveat in the way of an employee addendum that spells out strict concession payback and move-out protocols if the work relationship turns sour.
The biggest thing to consider is IRS implications. Always consult a good tax attorney when thinking about giving away money as I am certain our great Uncle will want his part.
Your – advocate of employee rent concessions – multifamily manic,
M
Apartment Budgets: Concessions
Welcome back for another installment on the subject of apartment budgeting. This week we are going to discuss the line items called concessions – new and concessions – renewals. Before we get started I have to admit some surprise. I did not think this kind of subject matter would spur much in the way of conversation but it truly has. And, we have posted some record numbers in the way of page views and the on and offline conversation has been very upbeat in nature. I have to give all the credit to Carin – one of our accounting team members at Mills Properties.
Up to this point we have discussed the main driver of revenue – rent. And, we have taken the time to walk through the ever complicated world of loss to lease for both new and renewed leases. And, just last week we penned about the quasi robber baron – vacancy loss. Let’s continue in the vein of loss this week with a discussion on the art of concession use.
Apartment Concessions
Concessions are defined as credits (dollars) given to offset rent, application fees, move in fees and/or any other revenue line item. They are generally given at the time of move-in to offset physical moving costs such as those associated with cross-country movers or cross town movers. Concessions are also used at the time of renewal as a way of offsetting the cost of a rent increase or the addition of an ancillary expense [Read: utility billing, renter’s insurance, etc.] to a new lease term.
They can be given up front or amortized across the life of the lease. They are also given during ‘oops’ moments. That is to suggest that if we drop the ball on the service side of things, we can give concessions as a way of saying sorry for the inconvenience. In short, we can say they are used for marketing and with that comes any number of perspectives for and against the use of concessions.
That being said, we have left out a number of good points and as a result I am looking forward to the conversation.
Your, burning concessions off as fast as reasonably possible, multifamily maniac,
M
