Key Takeaways
- Rental deals can help reduce vacancy, but they aren't necessary for every property. Well-maintained, competitively priced rentals in desirable Winston-Salem neighborhoods often attract qualified tenants without discounts.
- Before offering free rent or move-in specials, consider ongoing vacancy expenses such as mortgage payments, taxes, insurance, utilities, and maintenance to determine whether an incentive will improve your overall return.
- Setting an accurate rental price based on comparable properties is often more effective than offering large discounts. In many cases, value-added amenities or services can attract tenants while protecting your long-term rental income.
The decision facing every owner of rental property when a rental unit is vacant is: keep the rent as advertised, or offer a deal to rent to get a tenant fast. Providing an incentive may seem simple and quick to attract tenants, but in fact, incentives may not always pay off.
In some cases, they reduce the length of time a unit is empty and improve cash flow, but sometimes they reduce earnings without creating a competitive advantage.
For a Winston-Salem landlord, the answer to this question depends on the market conditions, demand in the neighborhood, the condition of the unit, competitors in the area, and, above all, the type of renter being targeted.
That’s why the team at TE Johnson & Sons has put together this guide to help landlords decide if they should offer a deal to prospective tenants in Winston-Salem. Keep reading to learn more.
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The Condition of Winston-Salem’s Current Rental Market
The rental market in Winston-Salem has become famous among the population due to its growing economy, educational organizations, healthcare business, and affordable rent compared to more populated areas.
The major employers in this city are hospitals, factories, and schools, where job seekers prefer to live in rental houses. There is a large diversity between neighborhoods in Winston-Salem, which also attracts potential renters.
Usually, young specialists try to find rental residential properties in the vicinity of downtown, families prefer to rent houses in areas with schools and parks, as well as shopping places, doctors prefer to rent apartments near hospitals, and older people like living in Winston-Salem because of the quality of life they can have.
In the competitive environment, landlords need to use strategic thinking to lease out vacant properties.
What Are Rental Deals?
Rental deals are benefits provided by landlords to prospects to entice them into signing a lease. Common incentives include free rent for one month, discounted first month, lower deposits, free parking, or free cleaning.
Landlords need to examine the costs involved in giving leasing incentives. The aim is to fill the vacancy rather than to lower the income.
The Hidden Expenses of Extended Vacancies
Before offering a discount, landlords must have knowledge of the costs associated with having an unoccupied property. Vacancy costs exist independently, whether rent is being received or not.
Typical costs associated with vacancies are mortgage payments, property taxes, insurance premiums and other utilities, landscaping services, regular upkeep and maintenance, and advertising costs.
A vacancy results in a loss of income from investments. Evaluating promotional offers based on annual revenue rather than monthly rent may give different results.
Not All Properties Require a Deal
Many landlords assume that every vacant rental requires discounts or special promotions to attract tenants, but that is not always the case. In many markets, well-positioned properties lease quickly without offering any incentives.
Homes located in desirable neighborhoods, priced appropriately for the local market, recently updated, and presented in excellent condition often generate strong interest on their own.
Effective online marketing, flexible showing schedules, and sought-after features can also make a property more appealing to prospective renters.
When a rental is already receiving consistent inquiries and attracting qualified applicants, offering concessions may simply reduce your rental income without providing any real benefit.
Instead of relying on promotions, landlords should evaluate the level of demand for their property and price it according to current market conditions.
When Does it Make Sense to Offer A Deal?
There might be times when incentives can definitely pay off.
1. The Unit is Taking Longer to Rent Than Anticipated
If your property has been listed for rent for several weeks with no applications coming in, you will need to understand why people are not applying. For this to happen, various reasons can be at play, including too high a price, too much competition, lack of features, and seasonality.
2. Seasonal Renting
Demand for rental housing varies based on the season. In the fall and winter months, homeowners are less likely to move than in the spring and summer months.
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Instead of offering a lower rental price permanently for properties, try some kind of promotion for potential customers who are searching for an apartment now.
3. New Construction
If there are several renovated houses for rent in a neighborhood, they could bring some additional benefits to their residents. It matters how competing homes are presented.
Lowering Rent vs. Increasing Service
Not every service provided to tenants involves lowering rent prices. In some situations, providing additional services can help save on expenses compared to lowering the rent price.
Some examples include cleaning carpets before moving in, painting the inside of the house, providing smart devices for the tenants, lawn maintenance, pest control, reserved parking, extra space for storage, and machines for the laundry room.
In many cases, these enhancements will result in better satisfaction for the tenants and ensure long-term rental income. Value perception plays an important role in addition to pricing.
Setting Realistic Expectations is Key
Substantial rent reductions can result in some negative consequences in the future. When tenants sign a lease agreement at significantly discounted rental pricing, they may be less likely to agree to a fair rental increase upon renewal.
Offering limited-time promotions can help avoid this issue since the normal monthly rent for the property will not change. Having market-based prices protects long-term investment success. Promotional programs should always complement, not compete with, future rental increases.
Competitive Pricing is Important
Before deciding to offer any type of incentive, landlords should make sure the property's asking rent is competitive with similar rentals in the area.
A careful market comparison should include factors such as the property's location, overall size, condition, number of bedrooms and bathrooms, available parking, unique amenities, and any recent renovations or improvements.
If comparable properties are leasing for less, adjusting the rental price is often a more effective strategy than offering temporary promotions or move-in specials.
Setting a realistic rental rate from the beginning helps attract qualified tenants, reduces vacancy time, and creates a stronger foundation for a successful leasing process.
Bottom Line
Offering a discount for new tenants is not necessarily good or bad. Instead, it is simply another tool available to the property owner.
Good property owners look at incentives in terms of market situation, costs of vacancies, demand in the neighborhood, the condition of the property, and the long-term goals of the owner.
Contact TE Johnson & Sons today to learn more!
