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Real estate is an attractive investment for a variety of reasons, but managing a real estate asset brings a number of challenges for which an average investor isn’t ready.
A typical real estate purchase is a safe and secure investment. It is a predictable place to put money and generate consistent annual returns. But there is no “typical” real estate investor. Look no further than your own street to find one property owned by a single landlord with a modest one-property portfolio, next to another owned by a real estate investment trust (REIT) like Blackstone with tens of billions in holdings. Everyone wants a piece of the pie and more often than not, much (or all) of the processes and software used to manage these properties have lagged behind the wave of Silicon Valley technology that has inundated the rest of our lives.
Finding the perfect property is one thing, but effectively managing residential real estate requires an entirely different set of skills. A landlord has to excel at marketing their property, determining rent prices, screening and processing tenant applications, collecting rent payments, performing maintenance and understanding all the legal aspects of landlording that govern tenant-landlord relationships. Additionally, they must always be available for the tenant phone calls that come in at all hours, day and night.
Neglecting just one of these functions could lead to a catastrophic loss that negates all recent earnings for an investment. It’s no wonder many landlords choose to hire a professional property manager.
There are an estimated 34,000-plus property management companies in the United States, and all of them require an office, a team of employees, a network of service providers and contractors, and well-defined processes for all the aforementioned tasks. This can all be very expensive to create as a business owner or to contract as a landlord. In a competitive marketplace, managers are always looking to reduce their costs. Technology offers ways to accomplish this without sacrificing a high quality of service.
How Technology Narrows The Gap
Technology is underused in property management but has the potential to drastically reduce expenses while improving the quality of service. Every tedious process should be streamlined or automated.
To start, leasing is a time-consuming process. Posting advertisements, responding to leads, handling showings, collecting and processing applications, and eventually preparing a lease, all require lots of manpower. This process would benefit from automation, but where do you draw the line between automation and human-centric customer service?
The trick is to automate as many processes as possible, while always providing a personal touchpoint. You still need leasing agents, but every part of the process aside from phone calls and showings can be automated: things like 3D virtual tours, self-serve scheduling of showings, automated tenant notifications, online applications and background checks, online lease signing and payment collection. All of this can now be either automated or heavily optimized with off-the-shelf software, a bit of non-technical customization and some defined processes.
This same philosophy should be applied to maintenance. A typical maintenance department revolves around phone calls, paper work orders and manual status updates. The result is hours and hours spent on manual data entry and long delays between when work is completed and when tenants and owners are notified.
Most of these manual functions can be eliminated with software. There are mobile apps that allow maintenance coordinators to monitor the progress of work orders and track the location of technicians. They can streamline check-ins and check-outs and prompt for photos to be taken before and after work is completed. Generally, for a product like this, a property management company will have to pay for an additional software product that integrates with their core property management software. This can be time-consuming and expensive but is almost always worth the investment.
It’s difficult to strike a balance between the importance of customer service and the value of automation. People will always be critically important to property management. Right now there isn’t a computer that can fix a toilet, and customers always need a friendly voice at the other end of a phone line. But with the pace at which technology is evolving, it’s critical that real estate investors and managers figure out how to leverage it to improve their service and rental experience.
[“Source-forbes”]
