Lease Up Bonus Ideas

I am looking for a few ideas for a lease up bonus program. Our firm generally doesn't do lease-ups and the project we are currently working isn't a lease-up in the traditional sense. It is an older value add property where we are doing upgrades on turns.

We made the decision to let our occupancy dip a bit in January and February to really turn quite a few units and have them ready for leasing. Additionally we have had some staffing challenges and we are bringing on some new leasing personnel.

We currently have a leasing bonus in place based on quantity of move ins. For example 1-5 move ins in a month is $35/lease; 6-10 move ins is $45/lease; 11-15 is $55/lease and 16+ is $60/lease.

Given our limited experience with lease up bonus programs I was hoping to get some insight on what others have done.

Thanks!

You might try creating a goal based bonus program. I've seen firms use 10% of the employees salary/wages as a baseline for the bonus, broken out into quarters. If the goal is met, the bonus is paid. Dividing the goals into occupancy, income, etc. works well so even if certain areas are not achieved, all is not lost. Shopping scores, closing ratios, etc. can be used for the leasing staff.

Leasing bonuses are a must - and honestly, you should definitely increase those numbers. Last lease-up I worked on it was $125 per lease no matter how many you got. Where I am now (a value-add like you are talking about) it is tier-based; 1-4 = $75, 5-7 = $100, 8+ = $125 ... At my lease-up we also had goals during slower months where we had to net a certain number of leases by the end of the month and then got to split a lump sum between everyone in the office ... for harder to lease units we have done double leasing bonuses...you could also do weekly goals where if your team nets a specific number of leases in the week then everyone gets a gift-card.....its all about incentivizing, and needs to be worth it...amazing things will happen when there is a prize

We use a percentage of contract value as the incentive. Typically its 1% or slightly higher. This includes any ancillary income secured i.e. parking, storage etc. If a concession is given it is factored into the contract value. We have kickers along the way as well. Hope that helps

I have also used a percentage of the total, net lease value and found it to be the most effective. As an example, if the rent on a 12 month lease is $1000, and the agent gives away a half a month in free rent, the total value of the contract is $11,500. 1% commission is $115.00, of which half should go to the leasing agent, and the other half split among the remaining team members.

The real money is made with the lease renewal and increasing the rent for the next rental term without losing the resident. Lease renewal bonuses should always be higher than new lease commissions to encourage great resident service throughout the lease term. 1.5% of the value of the contract is a great renewal incentive. Using the amount above, if the rent increases by $25 per month, the value of the new contract is $12,300, and the renewal incentive is $185. While this is slightly more than the total of the rent increase, there is no vacancy loss or turnover cost, making this a very attractive option to both the employee and the owner. In this situation, the renewal incentive is split among the employees involved with the renewal, usually the assistant manager and the maintenance team.

Personally, I think managers should be incentivized separately and should not share in the leasing or renewal commissions, unless the property is small and the manager also actively leases and processes renewals as part of their normal workday responsibilities.