To attract tenants to your Torrance rental property, you need a solid marketing strategy. But if you’ve been doing all you can and still find it hard to land tenants, or you suffer from a high turnover rate, then you can consider rent concessions.
Defining Rent Concessions
Rent concession refers to landlords making a compromise to the lease agreement. To attract tenants to rent or renew their leases, you can create short-term incentives. This is typically done to reduce the vacancy of your Torrance rental property.
Rent concessions are used since the income loss is far greater when your rental remains empty. The sooner you have tenants occupying the unit, the sooner you can collect the returns on your investment.
Some landlords offer a first-month's waiver on rent to encourage tenants to sign a leasing agreement with them. This also applies to tenants whose tenancies are up for renewal.
Rent concessions might result in lower earnings at the moment, but the rationale behind using them is that a vacant Torrance rental can be more expensive when it comes to property maintenance costs.
Different Types of Rent Concessions
Landlords provide concessions in a variety of ways.
You can offer a rent rebate, free amenities, or a fee waiver. You can market the rent concession to get the attention of prospective renters.
It can also be used to encourage tenants to renew their leases. Some landlords use them as one-time offers, others offer them quarterly, while others make use of them annually.
Typically rent concessions are offered with discretion. Tenants can sometimes request them before signing a lease agreement. Negotiations on the leasing terms can depend on the tenant’s needs and remain the choice of the landlord.
The most common form of rent concession is a reduction of the rental amount. However, several creative possibilities can be used, also.
For your rental unit, you can choose among the examples listed below for rent concessions:
- Free rent during the first month of renting the Torrance rental property
- Prorated rent during the first month of renting your property
- Waiving the fee for new renters in your Torrance rental home (fees may refer to pet fees or move-in fees)
- Rent discount for a longer-term leasing agreement (1-2 years)
- Waived security deposit as a new tenant of the Torrance rental
- Upgraded rental space (upgrades may include new appliances and decors)
- Free moving (moving truck may be paid for by the landlord)
- Allowing the tenant to paint, decorate or make changes inside the rental home
- Paying the broker’s fee for the Torrance tenant
- Internet fees and rental utility charges paid for by the landlord
- Free parking and/or laundry facilities
Landlords normally use these concessions to keep and attract tenants. If you’re planning to purchase a Torrance rental home as an investor, here are the rent concessions you should be familiar with:
1. Lease-up Concessions
If your rental property is newly built, especially if it’s a commercial building, you can consider a lease-up concession.
You may offer this to increase the occupancy rate of the rental building and gain a quick ROI.
2. Red Flag Concessions
When you see a red flag concession, it can be a sign of difficulties. Be cautious before purchasing such an investment rental.
Some properties may resort to concessions just to maintain high occupancy. This can point to bigger issues.
3. Marketing Concessions
Upgraded rental buildings normally use marketing concessions to attract renters. This takes the form of advertising using rates a bit above the average rent prices.
This can be done as long as the Torrance rental property is sufficiently rented out and prices are aligned with the existing market.
When is the Right Time to Use Rent Concessions?
In the drive to attract tenants for your Torrance rental property, rent concessions are a good tactic.
It can help reduce vacancies, especially if you’re opening a huge commercial space, the market is in a downturn, or finding tenants has simply become challenging.
Rent concessions are also a sound method to inspire existing tenants to renew their leases. If rental upgrades have been done, then rent concessions can also be used.
It’s common knowledge that steady earnings are what makes your rental business profitable. Thus, keeping your tenants is a priority.
If you have high-quality renters who take care of your Torrance rental property and pay the monthly rent promptly, then offer them concessions. This is a great way to keep good renters loyal.
It also helps you reduce vacancies, marketing costs and maintenance costs. If your rental unit has been sitting empty for a while, then you might consider applying rent concessions in your Torrance rental business.
Disadvantages of Using Rent Concessions
While rent concessions play a nice role in attracting and retaining tenants, you also have to deal with the cons.
Once rent concessions are in place, tenants may not want to let go of the privileges and may mistakingly assume the concession is permanent.
If you offer free laundry facilities when they sign up for a year’s stay in your Torrance rental, they might want to extend the concession when deciding to renew.
Taking the concession away may result in them moving out of the rental. The same goes for rent discounts; going back to the original rent price can lead to a falling-out.
To protect yourself from this, you can include the timeframe of the rent concession in your lease. It should provide more clarity and set expectations.
If you're having trouble finding tenants for your Torrence property, consider working with Pinnacle Property Management. We can help you secure quality tenants who pay rent on-time, month after month!