Landlords are trading traditional concessions for reward programs as an incentive to get renters into units.
More than 2 million Americans are enrolled in programs that reward them for paying rent on time as companies like Stake, Incentco and Piñata carve out roles in the industry, the Wall Street Journal reported.
The companies say the rewards programs are worthwhile for landlords, claiming they increase the chances of renewals, even in the face of rising rents. Tenants can use incentives — such as cash back or redeemable points — to cover rental fees, land store gift cards or just recoup a little bit of cash.
There is some psychology at play with the rewards. Renters are receiving benefits upfront and can tangibly understand what they are receiving as a result of signing a lease or staying current on the rent. But they’re also not getting nearly as much as they did with typical concessions, to the landlords’ benefits.
In the first half of the year, the average rental cost concession in the country amounted to 5 percent of annual rent, according to Moody’s. But renters enrolled in Piñata would have only been rewarded with the equivalent of .06 percent of Moody’s annual rent figure; it would take nine years of rewards to reach something comparable to the average concession.
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“It’s the psychology of points,” Incentco co-founder Gerry Wiatrowski told the Journal. “The perceived value is higher.”
Renters are saying the rewards programs aren’t necessarily enough to get them in the door, but they don’t hurt either, especially when it comes time to decide if it’s worth staying in place for another year. Piñata said about 97 percent of its members who faced an annual lease expiration renewed this year, well above Yardi Matrix’s national average of 65 percent.