Rental demand isn't consistent throughout the year, especially if you have properties in a college or tourist town. You don't want your properties to sit vacant for months at a time simply because it's slow. Between the lost rental income and issues with break-ins and other crime associated with empty property, it's not an ideal situation. One of the most effective options is utilizing your current tenant network to generate additional referrals for new properties you bring on board.
The Power of Word of Mouth
Word of mouth referral is a powerful tool for generating and converting warm leads who are already interested in your properties. You aren't dealing with a prospective tenant who looks at your property listing and comes into the screening process without knowing much about how you do business. Instead, you get referrals from people who have business dealings with you already. They can tell their referrals how you handle property management, your overall responsiveness, and how happy they are with their rental experience with you. You get referrals who are primed to rent from you, instead of someone unsure about how you do business. This saves time, marketing money, and helps you find qualified tenants.
Some tenants are happy to send you friends, family, and co-workers without any sort of incentive; however, it is generally more effective to give your tenants a tangible benefit to referring prospective renters your way. You want to offer existing tenants quality incentives, and one of the easiest to implement is offering a specific discount on a rental payment for sending a referral who signs a lease. Other options include gift cards for local businesses, desirable electronics such as a tablet, and free services such as a spa visit. Another benefit of working with local businesses for gift cards is creating stronger ties between yourself and your local business community. These contacts provide you with additional venues for advertising your properties, which also helps bolster interest during slow periods.
Managing a Referral Program
The most important consideration to setting up a referral program is determining when you want to put it in place. If you are flooded with applicants during the busy season, it makes sense to only offer referrals during the slow periods. If you only have a few tenants who potentially send referrals your way, it's easy enough to manage the program by hand.
If one of your first properties is a multi-unit apartment building, however, you may want something more automated in place. Consider a payment or software solution that helps you apply rental discounts to rent payments, records whether someone is owed an incentive, and informs tenants when the referral program is active. One of the easiest ways to track referrals is to give each tenant a unique link. When you see a referral from this link, you know exactly which tenant to credit.
The slow rental period doesn't mean your income flow has to slow down. An enticing referral incentive program helps you leverage your existing tenants to find warm leads to fill up your properties during the slow period. As a new landlord, maintaining consistent cash flow is essential to your business growth, so utilizing every avenue for steady income is a must.
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