SS270: Resident Referral Incentives That Actually Work

SS270: Resident Referral Incentives That Actually Work

Your current tenants can be a great source of new resident referrals. In this episode, Charles discusses creating resident referral incentives to drive a flow of new tenants.

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Talking Points:

  • Resident referrals are a great incentive that allows your current tenants to refer new tenants to your building. A disclaimer here is that every state has rules and laws around paying referrals to unlicensed people. In Florida, for example, the maximum referral fee is $50, similar to Texas. In these 2 states, this can be paid in cash, as rent bonuses, or as rent discounts/deductions. I would always check with your real estate attorney and your state before offering any resident referrals. With that being said, let’s discuss some ways you could craft a referral program.
    • Cash Bonus. Simply offering a hard-cash bonus for referrals immediately after a referred tenant signs a lease. To make this most effective, it is best to get the money into the tenant’s hands as soon as possible. 
    • Rent Credit. I feel this is less exciting, since the referring tenants get a discount on their next month’s rent, which is not immediate and less impactful.
    • Two-Sided Bonus. An example would be waiving an application fee for a new tenant while providing a bonus or credit to the referring tenant.
    • Seek Out Real Estate Agent Tenants. Ask all of your new tenants if they are real estate agents. If they are, you can become more aggressive with the bonuses if they are paid from one real estate broker to another real estate broker. This would be best handled by your property manager if you are not a licensed broker, since they are. This way, you can pay a bonus of several hundred dollars or more, which will definitely be more appealing.
    • Promote. Advertise your referral program everywhere. In elevators, stairways, common areas, the tenant portal, in every email, and in every piece of written documentation. 
    • Gifts for Failed Referrals. Offer a small gift to tenants who refer a tenant who does not ultimately sign a lease. This is a way of rewarding tenants who have tried to find you new tenants that never materialized so they continue to send you free leads.
  • Creating a resident referral program is a great way of increasing your current tenants, but where most managers fail is by not promoting it. If you are located in a state that limits the bonus you can offer, it can still be powerful to have a tenant referral program. A tenant who is having a positive experience with your property will refer new tenants, even with a small bonus.
  • To learn more about how to find tenants, check out episode SS216.

Transcript:

Charles:
Resident referral programs come in many forums, but if tenants aren’t excited, informed and rewarded quickly, they won’t refer anyone no matter how great the property is. Welcome to Strategy Saturday. I’m Charles Carillo, and today we’re talking about resident referral incentives that actually work from cash bonuses to rent credits to sided incentives, and even how to leverage tenants who are real estate agents. So let’s get started. Resident referrals are a great incentive that allow your current tenants to refer new tenants to your building. Now, a disclaimer here is that every state has rules and laws around paying referrals to unlicensed people. In Florida, for example, the maximum referral fee is $50. Similar to Texas in these two states, this can be paid in cash as a rent bonus or as rent deductions and discounts. Now, I would always check with your real estate attorney and your state before offering any resident referrals.

Charles:
With that being said, let’s discuss some ways you could craft a referral program. First is cash bonus. Simply offering a hard cash bonus for referrals immediately after a refer tenant signs a lease. And to make this most effective, it’s best to get the money into the tenant’s hands as soon as possible. Next option is a rent credit. And I feel this is less exciting since the referring tenants get a discount on their next month’s rent, which is not immediate and it’s less impactful. The two sided bonus, an example would be waiving an application fee for a new tenant while providing a bonus or credit to the referring tenant. Seek out real estate agent tenants. Ask all of your new tenants if they are real estate agents. If they are, you can become more aggressive with the bonuses if they’re paid from one real estate broker to another real estate broker.

Charles:
And this would be best handled by your property manager. If you, you are not a licensed broker because they are this way, you can pay a bonus of several hundred dollars or more, which will definitely be more appealing to them. Promote, advertise your referral program everywhere and elevator stairways, common areas, the tenant portal, and every email and in every piece of written documentation. Gifts for failed referrals offer a small gift to tenants who refer a tenant who does not ultimately sign a lease. Now, this is a way of rewarding tenants who have tried to find you new tenants that never materialize, so they continue to send you free leads. Creating a resident referral program is a great way of increasing your current tenants, but where most managers fail is by not promoting it. If you are located in a state that limits the bonus that you can offer, it can still be powerful to have a tenant referral program.

Charles:
A tenant who is having a positive experience with your property will refer new tenants even with a small bonus. And to learn more about how to find tenants, check out episode SS 216. That’s SS 216. Hope you enjoyed. Please remember to rate, review, subscribe, submit comments on potential show topics at globalinvestorspodcast.com. If you’re interested in actively investing in real estate, please check out our course and mentoring programs at syndicationsuperstars.com. That is syndicationsuperstars.com. Look forward to two more episodes next week. See you then.

Links Mentioned In The Episode:

  • SS216: How to Find Tenants

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