For the longest time.. owning real estate has been immortalized as the cornerstone of the American Dream. You drive into the city or maybe out into the country and you see this property that spurs visions of “making it” or “arriving” at a place where you can finally feel satisfied and financially independent. It could be your first investment, maybe it’s your 10th, but the pursuit is still so sweet!
Full stop… Nowhere in that grand vision however does it pop into your head, “this would be so fun to buy for.. someone else”. The likelihood is, the first thought is probably pride.. how you’ve been financially savvy, or disciplined or you negotiated well enough that your wealth is now about to grow. This is the way most human beings are geared. This is also the reason that in previous posts I’ve explained the Consumer-Renter dilemma. The premise is that we’ve built a rental industry on top of the needs of the property, not the renter.
Sure, improving management capabilities is incredibly important and we certainly can’t forget that. Property management is highly complex. Tracking all of the various financial transactions that take place around that property becomes incredibly arduous. These digital tools mainly came out of necessity of that key focus; costs, debt or income. Recently, some common themes have popped up during my conversations with clients.
I often hear the same few things.
- I started investing in real estate to make money. Unless you’re in the ultra wealthy class, you’re not making massive and risky investments with the thought of providing a place for others to live. Let’s be honest. You’re probably thinking.. I hope they don’t put holes in the walls and burn marks on the carpets. The fact is.. customer service is tough. Companies dedicate entire teams to the task of keeping people around, keeping people happy and still it can feel like a science nobody understands.
- No one will ever care for my property as much as I do. In the end, renters leave anyway. The reality is, other people won’t care as much. Therefore we put up safe guards like lease terms and security deposits to help insure the property remains as good as we found it. If consumers had a reason to care more, they wouldn’t leave at a rate of 55–61% year over year. Failing to create loyalty, turnover lead to us finally making the decision to hire property managers instead of doing everything ourselves. It also helps provide a helpful barrier between ourselves and our renters.
- Even hiring a property manager was a big decision we were reluctant to make. Long term rentals are a tough business. Given some of the above, the margins are typically low and turnover is really high. It’s a sensitive balance of investment and care that allows you to come out on top. Adding in a property management firm is a natural sign of growth but is done so knowing that your gross income will inevitably go down. The only hope is that it expands your ability to “get back to work” and build up your portfolio of properties.
- Not hearing from our renters is a good thing. This goes back to the original statement that you didn’t invest in real estate to hear what everyone else thinks or needs. When you hear from your renter, unfortunately it’s typically negative. This is to be expected but drives a wedge between the tenant to owner or property manager relationship.
- We’re seeking other opportunities to generate income within our property. There used to be a lot of focus around upgrading counter tops and providing concessions on rent. As rates go down and competition throughout the market increases, owners and managers have to get far more creative. Putting vending machines in common areas and requiring tenants to pay for parking spaces certainly has gained popularity, but other opportunities like insurance benefits, pop-up workout classes and credit improvement programs are gaining traction.
Though these themes may seem disparate, I’m intrigued by the symmetry. The connection between renters and profits grows more apparent by the day. Yes, you have to cover the basics of the business. Of course Marketing, Listing, Lead Generation, Background Checks, Online Payments, Reporting and Accounting can’t be ignored. However, thanks to technology we’re about to see a leap in opportunity for both property owners as well as renters.
There are a number of interesting services that are coming to market. Some of them bolt onto the existing services property managers may already work with while others may be taking a starkly new look at the market and how to improve things. We’ve definitely come to the realization that to take a leap forward, you must first tear things down to the studs and rebuild. Therefore we’re focused on a comprehensive solution that not only takes a hard look at the basics, but also uses new found efficiencies in data and consumer behavior to maximize the rental business.
As a property manager.. focus on why you got into the business in the first place.. financial independence. It’s now all you have to focus on because you have Leasera focus on why we got into the business.. to build a value chain of empowerment that will redefine renting forever. You focus on the property.. we’ll focus on the process.
