Lease up for a new property - specials or no specials...

Hello everyone! I am a property manager for a brand new 200+ unit property. It's a luxury apartment with high prices. We are on a street that has 3 other apartment communities that are 10-15 years older than us, they are luxury too but their prices are a little cheaper.

I've never done a lease up property - but I've heard its tough - and I'm beginning to experience that. My owner isn't crazy on specials at this moment - but my question to y'all who are experienced in this, are specials for lease up properties crucial?? If they are, what do you think is an acceptable special for a lease up? I was thinking about a Visa gift card when they move in? The owner doesn't want to take money off the monthly rent.

Any ideas and/or advise would be greatly appreciated!

Thank you!

Erin,

I can give you a way to give a special and actually not give up any money. Now it will involve me doing a shameless promotion, so email me at [email protected] and I can give you a couple of hinters which may assist you.

Nate

Erin-

In my experience with lease ups it's definitely ok to offer a upfront concession. You are most likely on a construction loan and the owner needs you to be as occupied as possible as quickly as possible before they have to switch the loan over. That's also why you should never offer a concession as reduced monthly rent because it will affect the value of the property when they refinance.

I have done as much as six weeks free upfront on lease-ups where in the same market in a stabilized community we would never offer a concession.

When I did a lease up several years ago, we had drawings each month after move-in for nice prizes. We offered free application fees (if they were approved, we applied it to their first month's rent.

Lower security deposits for those who qualified ($99 deposit).

You just have to get them excited about it. If they see you excited, it's contagious.

Have Lots of "Open Houses." If they come, look, love it, they lease it when they are ready.

Have a model that is over the top with stuff. Use the prizes as props. For example.

A TV with an XBox. Put signs on the them "Win this in January" or "Win this in February."

A friend of mine is having a "wine walk." It includes wine, cheese, crackers and tours of the community. It's getting popular!

Good Luck!!! Let us know what ideas you use that are successful.

Sandy in South Carolina

I just got finished with my lease up phase, we did no deposit and 1st months rent free. was very popular! we also had our resident referral bonus program.

In all seriousness, as crazy as you think this could sound, tell your owner that in order to compete with the other property he should buy it.

It worked for one of my clients.

Good luck!

Erin,

What did your owner finally decide on and did it work?

There isn't really a blanket answer in deciding to offer specials or not. A lot is dependent on your owners/investors and their future plans with the community. I've been in the industry 20 years with the last 15 concentrated in lease ups from Florida to Colorado. Each market is obviously different and varies depending on your location and needs of your company. Here's a couple of tips that helped in my successes:

Offer discounts off of ancillary income such as pet rent/fees/deposits with approved credit, app/admin fees. These offers won't hurt your bottom line and will not depreciate the value of your community.

Your staff should be experienced enough to "peel the onion" and uncover what is truly important to your future residents. Most of the time it's pretty simple. Remember they are not only selling the community but themselves and their customer service. Fact finding and knowing your competition is of the utmost importance. Yes the communities down the street might be less expensive but they're probably not comparing apples to apples. Put together a professional presentation of your competition and have your agents utilize it while they're touring. For each community list the differences that set you apart. Don't let them walk out... maybe a look and lease special that's good just til the end of business?

If you feel you must offer specials... offering them upfront will help. ie 1 month free on a 13 month lease. Your income will start generating after the first month but better than prorating which goes back to "depreciating" the value.

Look at your more difficult floorplans or target units that are less desirable and only offer specials on those. Easily explainable to your future residents and higher ups and not giving away the farm. Work with your local rental furniture companies and set up a mini model to implant ideas on how they can furnish and utilize the awkward space.

I'd love to hear how it went for you!

Laura Denver, CO

I found your information very helpful, thank you!