Building Community: How to Utilize a Tenant Referral Program

June 3, 2019

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Rent Manager

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The ultimate goal of many property managers is to effectively maintain all aspects of the property itself. From tracking expenses to handling maintenance on damages to ensuring that “the show” is running smoothly, without a hitch.

There’s a multitude of responsibilities that come with the job. However, none of these efforts matter if there are no tenants to live in the space you’re providing. Gaining tenants to fill your property is crucial for success; but sometimes, the process of acquiring new residents can be difficult.
Once you have tenants occupying units, great. But, how do you gain more? How do you keep your property growing? Thankfully, there are methods to facilitate in those cycles. One of those being tenant referral programs.

Let’s delve a bit deeper into what these programs consist of, and why it’s a key measure to consider right now, as we are currently in the heat of “leasing season.”

What are Tenant Referral Programs?

A tenant referral program is ultimately when a property offers incentives to its existing tenants to recruit prospects to commit to a lease. These current tenants often reach out to people they know personally or may advertise it on their social media to draw people in and sign on the dotted line. If that prospect converts to a resident upon that referral, you would reward the individual that helped fill your vacancy.

The Benefits of a Tenant Referral Program

As a property manager, you want to aim for minimal vacancy. When you have a plethora of empty units, no one is paying rent on them and that’s obviously a problem. That lack of income makes it even more difficult to compensate for the associating costs. To put it lightly, too much vacancy can kill the value of your property – which is why referral programs like these can quickly become the medicine to take that pain away.
Some property managers may question this tactic. Other than gaining new tenants, how can referral programs make a long-term difference? When in reality, there are several benefits that go hand-in-hand with this strategy.

1.) Work smarter, not harder

Consider tenant referral programs as your newfound marketing campaign. Current tenants are reaching out to people they know on a personal level, people they follow, people who reassure them that their names will be mentioned when asked who referred them to the property, making those rewards much more attainable. With a referral program, your tenants are already doing much of the heavy lifting for you. They’re providing information and support, and not to mention, advertising the property.

While some property managers may feel strong in their current marketing efforts, that doesn’t change the fact that people are naturally more apt to trust those they know. By having that initial contact with a familiar person, they may feel more confident in moving forward with a lease. The decision to sign a lease then feels more personal and less transactional.


83% of consumers say word-of-mouth recommendations influence their purchase decisions.
-Jay Baer, Convince & Convert


2.) A stronger community

A referral program ultimately helps build connections across the board. For starters, your relationship as a manager with your tenants is deepened. Now, you are partnering together as a business for the betterment of your property. It’s more of a collaborative tie, as you are both aiming to bring in fresh, suitable tenants.

In addition, the sense of community is heightened. When your property is filled with people who know each other well, a stronger sense of morale and happiness is likely amongst your tenants. Ultimately, it has the power to transform not necessarily the property, but the “environment.” By having better engagement between you and your tenants, it becomes a space you want to work in and a place that new people want to be a part of.

3.) An extra hand during leasing season

As mentioned before, we are currently in the thick of prime leasing season. History goes to show that between the months of May-September, leases are typically just beginning or ending. Which means that property managers are in need of new tenants to replace the departing ones. Additionally, they are hoping to retain those residents who are on the borderline.

According to a 2018 report, 83% of consumers say word-of-mouth recommendations influence their purchases. The same way you might trust a product if someone you know recommends it to you, potential residents are more likely to trust a property if someone they know refers them.

Tenant referrals can be a great aid during this transition period. By implementing a program that effectively helps bring in new people during the time they’re searching and in between leases is a sure-fire way to gain some traction in receiving new tenants. It also keeps your current tenants happy through their earned rewards.

What can you offer?

Now that we know what a tenant referral program is and how it can be instrumental to your property, let’s discuss some incentive options that you can offer to your current tenants:

1.) Money

Monetary incentives are usually the most common. This is when a property manager offers a payment to the tenant who successfully refers a new person to the property. It could be a simple $50-100 payment per new resident. This reward may seem the most desirable, as the tenant may feel they are truly being gifted for their efforts. The amount of payment is entirely up to you, and of course, is dependent upon the property’s current circumstances.

2.) Discounts

Another alternative that’s in a similar vein to payments is discounts. This could include discounted rent, parking, utilities, etc. While this may not be as appealing as an outright payment, it’s still helping a tenant financially with their expenses.

3.) Amenities

Lastly, another option you could utilize is offering additional amenities to those who are effective in bringing in new tenants. This might include reserved parking spots; upgraded electronics in their unit; access to special rooms offered, equipment or services; and the list goes on.

Some things to keep in mind

It’s important to remember that tenant referral programs will only work if your current residents are happy. After all, a resident isn’t going to refer their friend to your property if their own needs and expectations aren’t being met. Another thing to take into account when considering a tenant referral program are the types of residents that call your property home. If the referral is coming from a tenant you’ve had issues with in the past (late rent, complaints, damages, etc.), there is a chance the person they are referring may behave similarly. Who you choose to approve directly impacts your job and the safety of your community, which is why screening potential tenants is a crucial task. But, as always, make sure your policies and screening process complies with local, state, and federal regulations.

Make it your own

Tenant referral programs can be greatly helpful to you and your staff. Every property is entirely different, so it’s important for a manager to evaluate their situation, their abilities, and the temperament of their tenants in trusting them to recruit exceptional new residents. Get creative and aim to craft a program that will help achieve your occupancy goals and better the status of your community as a whole.

By Kelsey Rizzuto

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