Offering a resident rewards program can seem like a great way to incentivize good behavior from your residents and offer an easy way to make tenants feel appreciated. While this can certainly be the case, there are some considerations you should take into account as a landlord or property manager.
A resident rewards program can offer a lot of benefits for landlords and tenants alike. When executed well, tenant rewards can foster a great landlord-tenant relationship, increase retention rates, promote referrals, and even foster community engagement. If you are a property manager or landlord considering implementing a resident rewards program, don’t miss these important considerations.
What is a resident rewards program?
A resident rewards program is an initiative designed to reward tenants at your rental property with incentives and benefits for positive tenant behaviors like paying rent on time, renewing leases, or referring new residents. A resident rewards program is a great addition to a comprehensive resident benefit package.
Benefits to a Resident Rewards Program:
The idea of a resident rewards program is to increase tenant satisfaction while also encouraging good tenant behaviors. With thoughtful planning and attention to ROI, implementing a resident rewards program can be a win-win situation, helping to mitigate bad tenant behaviors and promote cost-saving behaviors like preventing damages, late rent, and increasing income through lease-renewal and new residents.
Increased Retention
Reward programs that highlight benefits of renewal can be what sets your property apart from the competition. Added perks at renewal season can be a big incentive for residents who are being encouraged to leave with new resident discounts or incentives at other rental properties. Whether you incentivize renewals in general, or opt to encourage long-term leases (or both), you can greatly reduce turnover rates and vacancy periods with cut into your bottom line.
Learn more: How Much Does Tenant Turnover Really Cost?
Foster Community Engagement
A great residential community is key, many tenants are looking for rental properties that foster community and offer amenities and resources to encourage socialization and connection. A rewards program can be used to encourage involvement and promote your current resident engagement opportunities, ensuring that current and future tenants feel at home at your rental property.
Learn more: Top 8 Reasons to Host Regular Resident Events at Your Property
More On-Time Rent Payments
Landlords and property owners take on multiple expenses when purchasing a rental property, including monthly mortgage payments. This can make late payments a chore to deal with each month. While studies have shown that tenants using online rent payment methods are more likely to pay rent on time, there are additional ways to promote on-time rental payments. Offering a small incentive can ensure consistent cash flow for yourself or your property owners and can prevent tenants from needing to pay late fees.
Better Landlord-Tenant Relationships:
Landlords and property managers want better relationships with their tenants. A good landlord-tenant relationship can go a long way to ensure a great tenant experience and make daily management tasks easier for you as the landlord or manager. Unfortunately, consistently needing to correct, fine, or issue warnings about bad tenant behavior can put a strain on the landlord-tenant relationship over time.
Offering tenant rewards packages and providing tenants with the tools easily pay rent, keep the property clean and maintained, and to connect whenever there is an issue can go a long way to preserve the connection between you and your tenants. Tenant rewards can further encourage good behavior, meaning less stress and warnings that can damage the relationship.
What should you consider before starting a resident reward program?
While a resident rewards program can offer some tangible benefits to landlords and tenants alike, some important considerations should be addressed before a program can be implemented. Evaluating these key factors can help you determine if a reward program would be beneficial to your property and its residents; it can also help you decide what rewards to offer and how often to offer them. Understanding your brand and your ideal tenants is a vital part of understanding whether you need to start a resident reward program or not.
Learn more: Branding Tips for Your Rental Business
Overall ROI:
Cost can be a big factor in the success of any program at a rental property. After all, owning a rental business means taking ROI into consideration with every decision you make. The cost of offering potential rewards is key to evaluate, depending on the area where your residents live, the type of tenants your property attracts, and the overal cost of living associated with the area, there are a lot of factors to consider when determining the long-term ROI of your property and any purposed tenant-retention plan.
It can be beneficial to start small and work your way up as you evaluate tenant interest and the effectiveness of tenant retention and referrals as a result of a reward program. For example: a small gift card at renewal, or offering to let tenants choose paint colors are incentives that don’t cost a lot throughout the year, but still let tenants know you acknowledge and appreciate their tenancy.
Competitor Offers:
Especially at renewal season, it’s essential to know what competitors are offering. Huge rent discounts, exciting perks, and enticing benefits are not uncommon tactics to get potential applicants interested in a new property. If you are facing the possibility of vacancies because competitors are offering incentives to new tenants, it may be time to implement resident rewards that can help make staying at your rental property more appealing.
Keep in mind that moving is expensive and a hassle, so you don’t necessarily need to match new tenant offers when addressing renewals, but being aware of what competitors are offering can help you determine what incentives may provide better ROI when it comes to renewal rewards.
Legal and Tax Input:
As with any program you’re considering at your rental property, it’s imperative that you are following state and local fair housing laws, landlord-tenant laws, and keeping tax implications top of mind. Consult a lawyer familiar with landlord-tenant laws in the area and consult with a certified public accountant to understand any legal or tax considerations of offering discounts, gifts, or financial rewards.
Ideas for Resident Rewards:
Resident rewards can take the form of monetary rewards, exclusive perks or experiential rewards, and community collaborative rewards to name a few options. If your rewards include resident events or exclusive access to amenities, be sure to provide these incentives in addition to current benefits for all residents.
To ensure good landlord-tenant relationships and good relationships between tenants, resident rewards should feel like an exciting bonus and not like amenities or community benefits were taken away based on behavior.
- Monetary Reward Options:
- One-time rent discounts
- Gift cards
- One-time waived fee
- Perks and Experiential Reward Options:
- Reserved parking (for the year or the month)
- Ability to choose paint color in unit or an accent wall within the unit
- House cleaning or carpet cleaning services
- Exclusive resident event or early access/after-hours access to amenities for a period of time
- Community Collaborative Reward Options:
- Partner discounts to specific businesses
- Donations to a charity of the tenant’s choosing
- Class pass or membership to local activities or fitness club