Rent Incentives in Today's AB Rental Market

[JBagorio]

Hi All

With the number of vacancies we face in Alberta today due to over supply. What are the creative incentives you are offering today to be able to compete in this downturn?

Please share with the rest your strategy in attracting good tenants.

 

[Thomas Beyer]

Advertise more
Advertise more creatively
Pay referral fees to existing tenants
Price competitively and that may mean 10-35% lower depending on what you have and where
Give incentives skewed towards back end of lease
Include freebies like new TV
Show enthusiastically
Fix deficiencies
Make suites look bright and clean

 

[Matt Crowley]

Very clean suites
Freshly painted
At market and below market rents
Mirrored closet doors in smaller bedrooms
Change all vents that are banged up or looking scabby
Ensure all light bulbs are changed in suite
Lower DD to get first month payment as low as possible (req. tenant's insurance)
Separate out main floor and garage cost allow option of taking only main floor
Charge utilities as % of house utilities rather than as fixed rate (get the price tag as low as possible)
Considering room rentals for one stand alone house I have in Mill Woods...rents have fallen roughly $150 from last year and I don't like the financials on it

My challenge right now is not getting interest in taking my suite, it is the number of unreliable tenants with high dollar amounts in collections. I've approved several people for tenancy pending the credit check and then all of a sudden I was told they would surely fail a credit check. $90k LOC they never paid, second foreclosure, or $8000 in unpaid utilities. I've never had such problems finding credit worthy applicants.

We are at the shoulder season for rentals. It will begin getting easier to rent out homes come April. Right now, I am competing with apartment units and the advantage of having a whole home seems less because tenants don't spend much time outside.

The other challenge is that many landlords are getting desperate and approving good-looking tenants before calling their references. So I will have a borderline tenant that I am willing to approve but they were accepted the moment they put in an application.

Tenants understand the rental oversupply and are aggressive in asking for discounts and whether rent is negotiable. I've heard how it is weird that I am asking for garage rent separate. At this point, my response has been that it is important for me that the whole household functions together and the lifestyles mesh. I don't let repairs go remedied and it is important to me that my tenants are comfortable and looked after. There is a big difference between homes that are cared for and homes that are neglected and that is what you are paying for.

It is a tough market out there today.

 

[JBagorio]

Thomas, Matt, thanks you both for sharing your strategies! There are sure plenty of ideas here. I for one could use some of these with the current vacancies. Much appreciated!

 

[margaretcowan]

I'd love any ideas for more creative advertising in Edmonton. Our ads are on Kijiji, Rentboard and the PM's web site + a big sign on my property on Whyte Ave and a sign in the window of my unrented basement suite in Millwoods.

For my units on 82nd/Whyte Ave, the on-site manager says very few people are coming through the door to look at suites. The outside of the building and the property are well kept, but the building is a basic box, not an architectural marvel! The inside looks great, freshly renovated.

So far, we've offered existing tenants a dinner out + movie for two people for referring accepted tenants but no takers. We're offering new tenants incentives of half a month to one month free rent at the beginning of their tenancy with no lease. The PM said asking people to sign a lease of any length in return for an incentive wouldn't work since people feel too uncertain about the future to sign even a 6 month lease. My PM said telling new tenants they'd get December rent free wouldn't attract people in this market.
What's your experience with incentives?

This week I looked at online ads at what the neighbours are asking for rents, saw they'd lowered rents and told my PM to lower my rents so we'll see if the units rent up.

I also wrote a tenant survey for my PM to give the tenants to find out what they want most and don't like so we can keep the existing tenants. My own landlord (600 units where I live) ran a survey and got some good suggestions and feedback.

 

[Matt Crowley]

Hi Margaret,

Yes, Edmonton is tough right now. My current incentive is March free and my rents are down about 10%. I say pay only 50% of household utilities (I own legal suites). I have had in the neighbourhood of 50 calls this week since Tuesday (I'm not exaggerating, it has been a barrage of calls). Keep the DD as low as possible so that there as few barriers to rent the suite as possible. I put the headline price as absolutely low as possible. I don't advertise garage prices. If they want the house, they want the garage. My 50% utilities are actually $250 per month with a rebate in 6 months with a utility addendum that allows for adjustment of utility rate depending on usage.

There are lots of renters out there but rents are down. If you were priced to market in 2015, keeping those rates in 2016 is a total illusion. I know you are not but landlords out there with vacant suites without visitors are in la-la land thinking they will get the same rents they got 8 months ago.

You will spend minimum of 3x what you spent on marketing a year ago and 5x as many showings.

 

[JBagorio]

Hi Margaret

It is tough in both Calgary and Edmonton right now, but based on our current vacancy situations between the 2 cities, I am seeing better luck getting units rented quicker in Edmonton than in Calgary. Last month we had a 1 br condo in Oliver and it got rented for $1050 in no time offering the new tenant March free. In Calgary I have a beautiful basement unit and it been vacant since January. We sure need to do some creative ideas, and thanks to all the posters in this thread for some of the ideas.

The main point is to standout from the mass. Renovate, offer incentives, gift baskets, freebies, etc... Our unit should be the best one out there and not the cheapest.