concessions
Surprise instead of free rent
We are all accustomed to giving away discounts or concessions at time of move in or lease renewal. As an industry we have taught our customer to expect it. It’s time to change that.
Surprise
Starting tomorrow take the money you would otherwise give away in concessions or rent discounts and create an equal number of surprise dollars. Deploy those surprise dollars through random acts of generosity:
Every 10th person that walks in the door to pay the rent gets to pay $50 less
Every 22nd resident gets tickets to a local professional sports event
Every 7th resident gets a gift card to a local restaurant. Partner with that restaurant in ordered to subsidize the surprise
Every 33rd resident gets a free fitbit
Every 25th resident gets a free gym membership. Partner with the local gym to subsidize the surprise
Every 54th resident gets to do their laundry free for an entire year
Every 100th resident gets their cable bill comped for one year
Every 4th person that turns in a service request for leaky faucet gets a gift card to a water park
Every 17th person that turns in a service request for a noisy refrigerator gets a freezer full of meat
If you run a business in Colorado every 420th person to call in a service request for a smoke alarm battery gets a fat one. Okay – maybe don’t do this one…
You get the point.
You’re looking to surprise the hell out of our residents this year Multifamily Maniac,
M
Resident Referral Money
Before we continue with our budget discussion on the topic of resident referrals, I want to back up and remark on a comment that I saw this last week. The comment was posted on Facebook and whether it related to our post or not, I found it a bit amiss. It was along the lines that discounts for specific groups be it students, seniors, city service workers are dumb.
Now I would not debate the merit of the remark in the sense that there are more creative ways to give money away. I would/will take the position that if it works – do it. It’s kind of like print media. Despite our need/want/desire to get away from our reliance on print media and ILS’s – if they work – we should use them. That is until they run their respective courses.
Resident Referrals
I am fairly certain that resident referrals or giving money or gifts away in exchange for move-ins is employed by every multifamily operator out there in some form or fashion. On that note – are they dumb? If I apply the same logic as our Facebook commenter then I posit – yes. It’s a concession given to a specific group. And, there are more creative ways to give money, influence or incentive to that group. That said, I am both a fan and an advocate of using them be it in the form of a concession, gift card or otherwise. After all they are much cheaper that most print media and or ILSs.
Resident referrals are used to reward your best in place marketing machine. The people who live with you currently. Every single one of them are a marketing opportunity waiting to happen. And, giving them reward can/is a good thing. And, that reward can come in any number of means.
They are monies given in the way of a concession, gift card and or hard tangible item (think flat screen, iPod, iPad, etc..). Now, we could debate the amounts given or the merit of a gift in lieu of money. We can suggest that money is not remembered after it is given. In my mind, we could suggest the same for a gift.
It doesn’t matter where you book it (Read: which line item it hits in your budget) it all shakes out in the bottom line.
Make it Smashing
No matter how you give it away, I would suggest you make it an experience. If you give them a concession – couple it with an impromptu in-home celebration. If you give them an iPod – record an uber-cool celebration message and load it in. Have a party centered around resident referrals and introduce the idea of making a commitment to share 10% (matched by your company) of the fee. Invite the charity in to share in the experience. Get creative and make it worth remarking about.
Your – believing that if it works – use it – multifamily manic,
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
