Key Takeaways
Compare the cost of a concession with the financial impact of another period of vacancy before changing your asking rent.
Identify whether weak leasing activity stems from price, property condition, amenities, or listing presentation before choosing an incentive.
Structure any concession carefully so the advertised rent, lease terms, and upfront costs remain clear to prospective applicants.
Review Morristown rental competition and current asking rents regularly rather than matching a competitor's incentive without evaluating your own property's position.
For a property owner, every day with an empty unit is a loss of income. This can lead many landlords to make the obvious choice: offer a deal. But is offering a discount really the best approach for a rental property in Morristown, New Jersey?
In this article, PMI Prime Property will go over whether offering a deal to prospective tenants is the best move for your rental property.
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What is the Deal Supposed to Solve?
Before offering rental deals, a property owner should clarify what the discount is intended to achieve. If a rental property is listed and has not received many inquiries, the problem could be the price.
However, if the previous tenants see the rental but decide to go for another rental unit with better specifications due to the appliances, parking, lease terms, and amenities, then offering an incentive may help eliminate some of the hesitations.
Morristown Renters Have Options
Morristown benefits from its convenient location in Morris County and its allure to people from all walks of life. Just because Morristown is an attractive market does not mean that every rental property will lease easily.
Tenants often examine various rental properties before they make a decision. Tenants may consider not only the rental price but also parking availability, pet policy, utility bills, laundry facilities, outdoor area for recreation, benefits of renovation, and cost of moving.
Tenants who already love the apartment might be reluctant to finalize the deal because moving in means spending money. A landlord could, at least theoretically, eliminate it and provide an appropriate concession that will not lower the rental price.
Factor in the Cost of Vacancy
One of the worst mistakes a landlord can make is to focus strictly on the discount instead of the cost of having a vacant apartment.
The incentive may look like it is going to cost a lot initially, but compared to the cost of keeping the property vacant for another month, it may actually be way cheaper.
This is why landlords should think of putting incentives as a leasing expense rather than simply a loss of revenue. A concession that costs less than another month of rent lost could yield a better result than maintaining a higher rental price while the house is vacant.
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All Deals Are Not Alike
Rental incentives can be structured in several ways and have different implications.
Lowered First Month’s Rent
This option is probably the most straightforward. The landlord may post the property at the full rental amount, but tell tenants there will be a partial reduction for the first month.
This is easy to understand. The tenant will realize the benefit right away, while the landlord will have the rental amount advertised at the full amount.
Waived Fees
If appropriate, landlords may want to consider waiving an administrative, application, or allowable move-in fee.
This can make the property look less expensive without changing the recurring monthly rent. Any fee or concession would have to comply with New Jersey law and local requirements.
Help With Security Deposits
Lessening or restructuring the initial cost could entice qualified applicants who have the income but are hesitant about moving cash.
This option needs to be taken with caution, as security deposits are regulated via New Jersey law. Do not offer approaches that may open you or your finances up to issues or liability.
A Non-Cash Inducement
You can also offer practical things instead of lowering rental fees. Depending on your property, this could include all kinds of moving resources, parking arrangements, storage solutions, upgraded services, etc.
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When it Makes Sense to Provide an Incentive
Providing an incentive may be especially helpful in situations where the property has been reasonably priced, but is having temporary leasing problems. For instance, an incentive may still be warranted when:
The property is getting calls, but not that many applications.
Several similar rentals are competing for the same potential tenants.
The property is approaching a time of traditionally slow rental activity.
The owner of the property has a vacancy coming up quickly.
Possible tenants want that property, but are worried about the cost of moving.
A small incentive would cost the owners less than the next period of vacancy.
In these instances, the incentive may serve as a tactic rather than as a desperate need for a price drop.
When Concessions Should Not be Offered
One reason a concession may not be worthwhile is if the bargain cannot solve a real problem. If the rent is very overpriced, or if the property is not well-kept, or has missing amenities compared to the rest of similar properties, a concession may only bring about temporary relief.
The better course of action may be to make repairs to the property, update the listing, alter the rent, take better photos, or change the type of tenant you seek.
Landlords should be careful that they do not give a concession just because another landlord is doing so. Each rental market is different depending on neighborhood, property type, condition, and rent rate.
Final Thoughts
So, should you provide a concession in order to rent out a Morristown, NJ rental property? Possibly, but you must not do this out of frustration. Instead, it should be for business.
In most cases, the best course of action is not to give the biggest concession. Rather, the best concession is the one that is necessary to rent out the property and minimize vacancy.
PMI Prime Property can help guide landlords through this decision and help you decide if a concession is right for you.
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Frequently Asked Questions
How Should I Measure Whether A Rental Concession Is Worth The Cost?
Start by comparing the total cost of the proposed concession with the expected cost of leaving the property vacant for longer. Include lost rent as well as recurring expenses that continue while the property is unoccupied.
Then consider whether the concession addresses the actual leasing obstacle. A discount may make sense when a property is competitively positioned but prospective applicants hesitate over upfront costs.
Can I Use A Security Deposit Reduction As A Leasing Incentive In New Jersey?
The New Jersey Department of Community Affairs states that, for properties covered by the Security Deposit Law, the maximum security deposit generally cannot exceed one and one-half times one month's rent, with additional rules governing deposits and their handling.
Rather than improvising a deposit arrangement to close a lease, review the applicable requirements and consult a qualified New Jersey attorney when legal guidance is needed.
Should I Lower The Rent Or Offer A One-Time Concession?
A temporary concession can preserve the property's stated monthly rent while reducing a prospective applicant's initial cost, whereas a rent reduction changes the recurring economics of the lease.
Owners should compare both approaches over the anticipated lease term and consider how each will affect future pricing decisions. Before choosing either strategy, verify that the property's asking rent is competitive for comparable Morristown rentals.
When Should A Landlord Consider Professional Leasing Help?
Professional leasing support may be useful when an owner is unsure whether the problem is pricing, marketing, property presentation, or the leasing process itself.
For an owner weighing a concession, that broader perspective can help connect a leasing decision with the property's ongoing management and investment performance rather than treating a vacancy as an isolated marketing problem.
What If My Morristown Rental Still Is Not Leasing After An Incentive?
If a properly structured incentive does not improve leasing activity, avoid repeatedly increasing the concession without reassessing the property. The next step may be a marketing adjustment, a property improvement, or a pricing change rather than another incentive.
Owners should also make sure any leasing criteria and concessions are applied consistently and comply with applicable housing laws. When the cause remains unclear, a property management professional can provide another perspective on the leasing strategy.
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