One of the methods used to reduce vacancy rates is payment of referral fees. That method may be implemented by paying a tenant a reward for bringing you a prospective tenant who then rents one of your apartments. A second possibility is paying a referral fee to someone who works in a business and refers employees to your apartment complex. A third and somewhat controversial method is payment of a referral fee to a manager of a competitive apartment complex who, if that manager has no vacant apartments, refers the prospect to you.

Payment of referral fees is controversial. If your apartment complex is the only one in the area that pays referral fees your business may enjoy a benefit. But once the practice starts in an area many or most of the apartment complexes in the area will start paying referral fees believing that they will not be competitive if they fail to do so. When that happens every company has an additional expense but no company gains advantage.

If your apartment complex has a good reputation you will get referrals without paying referral fees.