As an incentive to attract new tenants, landlords are exchanging traditional concessions for bonus programs.

More than two million Americans are participating in programs that reward them for paying their rent on time as companies like Stake, Incentco and Piñata establish themselves in the industry, the Wall Street Journal reported.

The companies say the rewards programs are worthwhile for landlords because they increase the chances of renewal, even as rents rise. Tenants can use incentives – such as cash back or redeemable points – to pay rent fees, receive gift cards from stores or simply get a little money back.

There is some psychology involved in the rewards. Tenants get benefits up front and can see concretely what they will get as a result of signing a lease or complying with rent payments. But they also don’t get nearly as much as they would with typical concessions, which benefits landlords.

According to Moody’s, the average rental cost reduction in the first half of the year was 5 percent of the annual rent. However, tenants who subscribed to Piñata received only 0.06 percent of the annual rent offered by Moody’s. It would take nine years of rewards to reach an amount comparable to the average reduction.

Read more

Pay rent, earn money: Stake is a pioneer in cash rewards for tenants

Bilt’s $200 million round doubles valuation to $3 billion

Bilt Rewards launches Bilt Homes and achieves unicorn status

“It’s the psychology of the points,” Incentco co-founder Gerry Wiatrowski told the Journal. “The perceived value is higher.”

Renters say the rewards programs aren’t necessarily enough to make them a renter, but they don’t hurt either, especially when it comes to deciding whether it’s worth staying another year. Piñata said about 97 percent of its members whose annual leases were up renewed this year, well above Yardi Matrix’s national average of 65 percent.

— Holden Walter Warner