Resident Referral Program - How (well) do they work?

Hello Everyone !!

Have read about implementing a resident referral program to get vacant homes filled. We have about 10 homes ready to go and plan to start a referral program and will only be paying once a referral is approved and actually moves into one of our available homes. Would those experienced with such programs provide some advice? For example: Is a $100 Walmart gift card adequate to get people activated and excited? What other gifts/awards have you used? Should the award be given all at once or broken into two or three installments? How to decide who actually provided a referral? How to deal if two people claim the referral? Should a time limit be set for getting in referrals? Any other twists that make such programs work?


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We have a referral credit of $150 (probably more than we need) if an applicant is approved & moves in to the park. The credit is given against lot rent (i.e., the month after the referred person moves in). Our rents in this area are ~$650 for home+lot (or ~$300 for lot only). It works better in one of our parks and not as well in another. We know that word-of-mouth is our biggest source of new tenants. It seems that the park in which this works best is the park where we rent the most homes.

I think this is probably a bigger credit than necessary, but it’s not worth much effort to revise since an empty home earns nothing and the status quo is working for us. It helps if the manager talks up the rent credit to the new tenants because they are the ones who come into this new place to live with enthusiasm & social connections outside the park.

Your mileage may vary, of course.


The park where I did a lot of Lonnie Deals offered a free month’s rent, but only payable to the referer when the new tenant had been in the house, and in good standing, for 90 days. I always liked this, as people knew better than to refer a complete deadbeat who would fall behind on rent from Day One. Also, with the magnitude of our local lot rents (sometimes over $500/mo) the referral benefit is substantial enough to motivate people.

I’m sure there’s a million ways to structure referrals, and not saying that this is the right way. In fact, I bet MHP tenants would rather have a smaller referral today than a bigger one later. As we all know, these folks don’t always have the best money skills.

I have tried referral programs before and never really got the results that I wanted. The problem was basically that I had some residents who would (and still do) refer their friends and family soley because they see what I am offering as a good fit; But I also have residents and aquantences who keep their ear to the ground and find out who is about to move in and make some reccomendation and then claim a referral fee, at this point my effort toward building goodwill backfires as I am forced to reject some of these claims and the leech will go to work telling how I reneged on our deal.

What it boils down to is that compensating bird dogs is a great idea- but advertising for them is tough.

These programs are a good idea, as they cost nothing to implement and are paid on performance (unlike most advertising). You need to offer around $200, which is deducted from lot rent. These type of programs will not fill a ton of homes, but the few people you get will at least know about the park and have “skin in the game” as far as peer pressure from friends and family. It’s really a matter of trial and error, as some parks have tenants with lots of friends and family and others are loners. But we do it in every park we own.

Thanks to everyone for your experience and ideas. We want to get our now “Rent Ready” homes filled soon (via lease to own), and now have switched mostly to marketing; not doing much now on renovations except for a few minor completions and details. We have decided to go with the resident referral program and trying to decide if $100 in Walmart gift cards is enough to get residents excited. Have considered going to $200 in gift cards or some type of combinations of cards and/or rent credit. Hope to have the program up and going this week. Also, we will be developing a flyer to deliver to apartment dwellers in the area too. We also are talking it up around town and offering $'s to merchants who make referrals. Have tried Craigslist, yet not getting much from it since our town is a bit away from a big city. Still need to get to those dreaded potholes. What else should we be doing?

Too early to tell. Try those steps and see what happens. Be sure and mystery shop your manager – pretending to be a customer – and see if they 1) answer the phone 2) have a decent sales pitch 3) urge the caller to come out and take a look. Also do some exit interviews with people who looked at the homes and see why they didn’t buy. See if your deposit is too high, or your monthly rent.

Thanks Frank for you comments, especially about our rent and down payment. We are asking for about 6% down as an option fee (non-refundable) plus 1st month rent; this comes to about $2,000 to move into a 3 bedroom, 2 bath home. Most of our prospects are on some form of gov’t program (Sec 8, SS, or disability) and just don’t seem to have that kind of money. We are starting to think we are above the market and almost willing to punt and drop the up front cost to move in. Should we?

First off, I don’t know the exact system you are using on the homes. We do not charge an “option fee”. But that doesn’t really matter – all that matters is the final amount that the customer has to write a check for. $2,000 is pretty high in some markets, and normal in others. We can’t get $2,000 in Kansas City, Kansas, but we can get it in Devils Lake, North Dakota. I would start by comping what every other park owner is charging for the deposit, and see what the average is. You can also do “exit interviews” and see what the customers say. It’s all about market research and being an expert at what the market will bear.

That being said, don’t give in to the temptation to drop the deposit entirely. Then you’ll end up with a bunch of disaster tenants who will trash the home and run off. The key is moderation. The key is to be reasonable. The key is to find out what reasonable is in YOUR market.

Once you figure that out, stick with it and you will be fine.

We had huge sales problems in Kansas City until we dropped the deposit to under $1,000. Once we found the magic number, we unloaded all the houses fast. It’s no different than when they invented the dollar menu at McDonalds. I’m sure they tried $1.25 and $1.39 and then found the sweet spot was $1. Your mission is to find what that sweet spot is.