A Landlord’s Guide to Granting Rental Concessions

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Finding tenants to move into a property isn’t always easy, as there could be lulls depending on location, the time of year, or the rental price. Some landlords will provide incentives to possible renters rather than have an apartment or home sit empty for a month or two while searching. These incentives often come in the form of rental concessions, which can make the property more attractive and ensure that the owner doesn’t miss out on rental income. 

This guide will walk you through the benefits a landlord can grant on a rental property lease.

What Are Rental Concessions?

Rental concessions are any compromise a landlord or property manager makes on the lease terms to make the unit more attractive to tenants. The perk is often temporary, like an introductory offer on a credit card, meant to encourage a renter to sign a lease.

Rental concessions will typically offer a financial benefit to renters, forcing the landlord to cover some of the upfront costs. When handled properly, though, these compromises can reduce overall expenses for the property owner.

3 Reasons for Granting Rental Concessions

Property owners give rental concessions for a few different reasons. Often they involve the landlord not wanting the place to sit empty, and thus making a calculation that a concession will lead to a better return in the long term. Some reasons for granting concessions include:

You’re Having Trouble Attracting Tenants 

A landlord struggling to attract tenants to a home or apartment might see concessions as the only way to get someone living there. The longer the property sits empty, the more it will cost the landlord, so it’s sometimes worth providing an incentive to a renter in exchange for their name on a lease. 

You Need to Rent Quickly 

Concessions could become necessary when a landlord needs to rent a unit speedily and can’t afford to have it sit empty for a month. If a past tenant moves out or is evicted unexpectedly, you might find yourself in a rush to get someone else in there to offset your costs.

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You Want to Charge More for Rent 

Landlords can use certain incentives to offset higher rent charges for tenants. For example, you might agree to waive pet fees or provide new appliances in exchange for higher monthly rent on a long-term lease.

The goal is to keep someone in the rental unit as long as possible, but it all starts with getting a renter to sign a lease. By giving up a little, landlords can achieve more cost certainty moving forward.

Property manager explaining what a property manager does

6 Types of Rental Concessions

When looking at potential rental concessions you can use to attract tenants, you’ll want to select options that do the least amount of financial harm. Some incentives that you could offer your renters include:

1. One Free Month 

Perhaps the easiest way to attract renters is to give them the first month for free. If the property will be sitting empty anyway, not charging for the first month doesn’t put you out any money but ensures you have someone in the unit long-term if you get the tenant to sign a lease.

2. Lower Rent 

You can lower the rent to attract tenants if giving one month for free isn’t possible. Even a slight rent reduction makes renters feel like they’re getting a good deal, and you can always increase the rent in future years if your tenants decide to stay long-term.

3. Reduced Security Deposit 

Moving is expensive. When forced to pay a security deposit and the first month’s rent on top of the other fees, renters can find themselves in a challenging financial position. You are taking on some risk by reducing the damage deposit, but a $200 or $300 reduction isn’t going to make a major difference to your bottom line if the property is damaged.

4. Moving Cost Assistance 

Another way to help renters get into the property is by offering moving cost assistance. This one-time help could involve paying for a moving truck or storage locker during the moving process. Providing this assistance will only cost you a little but greatly benefits tenants as a rental concession.

5. Renovations and Upgrades 

Renters are sometimes more likely to move into a place if it’s due to receive upgrades. Letting prospective tenants know that you’ll soon install new carpet, fixtures, or appliances enhances the appeal of the place from their perspective and could help in overall tenant retention.

6. Free Amenities 

The amenities you can offer for free depend on the type of building, but incorporating extras such as cable, electricity, and heat into the rental cost can attract tenants. If the building has parking stalls, a pool, tennis courts, storage units, or a fitness center that would typically cost the renter a monthly fee, you can waive some of these as an incentive.

No two situations are the same, so your rental concessions will depend on your financial situation, what the rental unit has to offer, and what the potential tenant considers to be a perk. Go over your finances thoroughly to determine which incentives you can handle and which would be too much. 

The Downside of Rental Concessions

Although offering rental concessions can bring benefits, they aren’t a perfect solution. There are always risks involved, because these incentives are reducing your investment profits. Common pitfalls include:

  • Difficulty Ending the Concessions 

A problem you might encounter with rental concessions is that the tenant may want to keep them. Who would want to lose their free gym membership or cheaper rent, after all? Be ready for some pushback from your tenants when you remove the concessions during lease renewal.

  • Additional Financial Risk 

If you reduce the rent or damage deposit, that financial risk falls on you. You’ll want to go over the numbers thoroughly before granting economic concessions to ensure you can afford the incentives you’re offering. 

  • Attract the Wrong Tenant 

There’s always the chance that you’ll attract the wrong type of tenant when advertising concessions. Some individuals are only in it for the freebies, so you run the risk of bringing in a renter who isn’t afraid to break a lease or who can’t afford the rent in the first place. A good plan for tenant screening should keep this to a minimum.

  • Hinder Refinancing Opportunities 

When attempting to refinance, your lender might recalculate how much the property is bringing in after concessions, leading to higher interest rates. 

These drawbacks might not be fatal flaws as you decide whether to offer concessions, but they’re worth considering before making the offer. The goal is to earn as much as possible every month, and sometimes a short-term concession is the clearest path toward doing that.

Speak With a Washington, D.C., Property Leasing Specialist

Finding renters can be a challenge, with the constant pressure to track down interested parties, contact references, and negotiate lease terms, including possible concessions. It’s a lot of work if you don’t have help. 

The good news is that Nomadic Real Estate has a leasing team that can help secure quality tenants for any residential properties you own in the Washington, D.C. area. Contact us today to discuss your residential real estate leasing.

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Your portal includes a selection of extremely useful reports. Reports are available in the “Reports” section, and are distinct from the financial statements. Unlike financial statements which are static records, Reports are dynamic real-time records that will update with current data every time you view them. 

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Navigate to the "Reports" module in your portal:

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Enhanced Rent Roll Report:

Enhanced Rent Roll Report
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Unit Comparison Report
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Income Statement by Month Report
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The Documents area contains monthly financial statements:

Owner Portal Documents
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Download a statement to see month and YTD financials:

Owner Portal Property Statement

You'll also find a month-over-month operating statement:

Month over Month Statement

Portal Communication Tool

You can use your owner portal to communicate with our team. Any messages you send through the portal will go straight to your Account Manager. When we reply, you’ll get an email notification and you’ll also see the message in your portal next time you log in. 

Here’s an overview of using the communication platform:

Click "Communications" and navigate to "Conversations":

Commincation Dashboard Screenshot
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Click the "New Message" button and send your message:

Owner Portal New Message Screenshot

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Portal Conversation Response Screenshot
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You can reply in-line using the comment box:

Owner Portal Comment

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Portal Conversation Snapshot

Understanding the Ledger

Your portal includes a ledger with all transactions. The ledger is populated with data in real-time as transactions flow through our accounting software. Much of this information is also available in the Reports area, as well as the Statements in your Documents library, but the ledger is the most comprehensive resource for diving into the details. 

Please scroll through the sections below to get a better understanding of how to interpret the ledger. 

By default, transactions are sorted chronologically:

Owner Ledger Dates
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If you have multiple properties with Nomadic, you'll see the address for each transaction in the "Location" column:

Ledger Property Column
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The Description column displays the transaction type:

Owner Ledger Description Column
  • BILL: this is an expense transaction, such as for repair costs or management fees.
  • CHARGE: this is a transaction  billed to the tenant, most typically a rent payment. 
  • NACHA EXPORT: this is a credit we processed to your distribution account. This type of transaction is how you get paid! 

The Amount column shows the dollar value of each transaction:

Owner Ledger Amount Column
  • Positive Amounts: if an amount is positive, it reflects a transaction that is payable to you. Typically, this will be a rent payment that we collected from your tenants. On occasion, a positive number could also signify a journal entry or credit adjustment. 
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The Account Balance column shows a sum of positive/negative transactions at a given point in time:

Owner Ledger Account Balance Column
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Navigating the Propertyware Owner Portal

Your portal includes some extremely useful features that help you understand your property’s financial performance at a new level, with real-time transparency into every transaction.

Scroll through the snapshots below for an overview of portal navigation! If you need more help or have specific questions about using the portal, you can reach out to your Account Manager any time for a screen share. 

You can filter all info by date range or property:

PW Portal Filters

View a snapshot of income and expenses on your dashboard:

PW Owner Dashboard View

See every transaction in real-time on your ledger:

Owner Portal Ledger View

Statements and forms will be posted to your documents library:

Owner Portal Document Library

View a suite of real-time financial reports:

Portal Reports View

See a running list of all bills, and drill down for more detail:

Owner Portal Bills View

Under Bill Details, you'll find dates/descriptions/amounts and more:

Portal Bill Details

You can also communicate with your Account Manager through the portal:

Owner Portal Communication Tools

How do net distributions work?

Net distributions keep your accounting clean and simple. Each month we’ll collect rent from the tenants, deduct any repair expenses for the previous month and any management/leasing fees for the current month, and credit the remaining net operating income to your account. 

Net Distribution

You’ll receive a statement via email each time a net distribution is processed, and can view all transaction details in your Propertyware owner portal.