“How much is it going to cost for me to move in?”
When it comes to apartment style units, this is the question most frequently asked and usually has the biggest impact on the decision to rent the unit or not. You might ask, “Even more than the monthly rent amount?” The answer is yes. The reason is because apartment renters are typically not looking for a place to rent for the next 5 years. They will complete their contract and keep their options open. With shorter term thinking, the move-in cost plays a bigger role in their decision.
The logic behind move-in specials is to get your vacancy filled as soon as possible in order to maximize income. Minimizing your down time and doing whatever it takes is crucial to your long term success.
The hardest part of this concept to grasp is many investors want to collect a large deposit to protect themselves against damages. My response to this is to know your market, know what your direct competition is charging, and set your rates accordingly. If there are free move-in deals on an apartment complex next door, you might want to consider that or you could sit vacant a long time. There are more 2 bedroom units for rent than any other type of dwelling, creating a very competitive market. In a good market, move-in specials are not always necessary and the market will dictate that. In a soft market, aggressive move-in deals are the only way to stay relevant and fill vacancies.
Another common concern is “If I have too good of a move-in deal, we will only attract bad tenants.” Are you kidding me? Do you honestly think that good tenants don’t like to save money too? Every successful person I know likes a good deal. Sure, you will get some interest from people without jobs looking for a cheap place to move into, but as long as your property manager is thoroughly screening your prospects, this should be a non issue. This is ludicrous logic and not simply not valid.
Having the right property manager will help put you in the best position possible to succeed. I have taken over properties from previous management companies because the owner was not happy with vacancies. Almost without fail, the previous management company was not up to date with current market trends and conditions, therefore they were getting out competed. Having market knowledge and adjusting rents and rates accordingly, is key to any investor’s success.