Tenant incentives, like rent reductions or help with move-in costs, are something Canadian tenants don’t often see.
While these incentives are not likely to appear in tight markets like Vancouver or Toronto, news sources are reporting that other landlords — like those in Calgary facing record high vacancies — are being forced to consider all of the options.
If you find yourself pondering tenant incentives as a means to fill an upcoming vacancy, consider these points:
1. Avoid reducing the security deposit. The allowable amount for a deposit tends to be low compared to potential costs of repairing a unit, so it’s best to keep that off the table.
The other issue with security deposit reductions is that it may attract tenants who can’t afford it in the first place. Incentives are supposed to be used to attract good tenants, not accommodate bad ones.
2. If possible, use tenant incentives that minimize the need to modify the tenancy agreement. Use care when modifying individual leases. Read through the entire document to avoid inconsistent or contradictory language throughout the lease. Keep an unmodified “master” copy of the tenancy agreement.
3. When advertising incentives in rental ads, keep track of where those ads are posted. To the extent possible, remove them when the vacancy is filled so there is no internet history. Otherwise, if prospective tenants research the property, they may find multiple incentive offers or price cuts. That can make it more difficult to negotiate with future prospects, long after the vacancy rate goes back down.
4. Avoid negotiating different incentives with different tenants. Property management and tenant screening policies should be applied uniformly to all rental applicants and tenants. Carefully consider your bottom line and stick to it.
5. A strategy used by professional marketers is to offer perceived value over actual cost. When choosing an incentive, look at what you have available for free or low cost. For instance, allowing pets or smoke-free housing is a low-cost option that may be enough to entice good tenants to choose your property.
6. Don’t panic! The biggest risk with offering tenant incentives is attracting marginally-qualified applicants. Be aware of the risk, and don’t cut corners with tenant screening, even if the rental market is tenant-friendly. It is generally cheaper to leave the property vacant than to bring in a bad tenant.
This post is provided by Tenant Verification Service, Inc., helping landlords reduce the risks of renting with fraud prevention tools that include Tenant Screening, Tenant Background Checks, (U.S. and Canada), as well as Criminal Background Checks, and Eviction Reports (U.S. only).
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Disclaimer: The information provided in this post in not intended to be construed as legal advice, nor should it be considered a substitute for obtaining individual legal counsel or consulting your local, state, federal or provincial tenancy laws.