Monday, November 2, 2009

Tenants offering incentives to tenants

Posted by Scarlett Lu

Homeowners have been finding it difficult to find new tenants due to the rise of the unemployment rate. Landlords have been offering incentives to encourage tenants to stay. These incentives may include a flat-screen TV, cash, new carpets, kitchen upgrades, two months free rent, etc. Landlords want to avoid having empty lots; sometimes apartments are empty for months which require marketing. Having a vacant apartment is extremely expensive for landlords; they would have to fill in to pay for broker’s fees and lose months of rent. Since the rise of unemployment has been increasing, tenants find roommates or move to cheaper apartments. “In the third quarter, the national apartment-vacancy rate hit 7.8%, a 23 year high. “ Many landlords are doing whatever they can to keep their units occupied. Equity residential said new tenants are paying 9%-10% less rent than previous residents. The higher vacancy rate is pushing down rents and value of those units. Landlords are now more willing to negotiate with you for lower prices on rent; they want you to stay because it’s hard to find new tenants. Lower rents will also put pressure on house prices, since renting is its competing product. Rents will continue to decrease if unemployment rate continues to rise.

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