The Investors’ Game Plan, Part 3: Optimize Your Rental Business
In this Investors’ Game Plan series, we’ve talked about everything you need to know before diving into the industry in Part 1, and Part 2 looked at how you can create a foolproof marketing strategy for your rental business.
Assuming you’ve done well on those two fronts, by now, you’re probably beginning to gain pretty decent cash flow from your rentals business and are ready to start growing your rental portfolio. But how can you make this success scalable and repeatable as you add more properties to your business?
Let’s go through 3 steps you can take to optimize your results, so you can keep growing your business efficiently by leveraging technology and automation:
Automate Repetitive Processes
The bulk of the work involved in running a rental business involves carrying out lots of routine (and, let’s face it, mundane) tasks, such as maintenance, liaising with tenants and contractors, preparing and vetting documents, screening tenants, marketing, etc.
When you’re ready to grow your rental portfolio, you should look into what you can do to standardize those tasks, saving you time and energy in the long run.
List down all of the processes you handle regularly – anywhere from the tenant screening process, rent collection, coordinating with contractors for repairs and maintenance work, and see which ones have the greatest opportunity for automation. Anything which is repetitive and data-based should be relatively easy to automate using online (and generally cheap) tools.
For example, spreadsheet integrations and CRM systems can be used to automatically send emails to tenants to remind them when rent is due, or to send notices when they’re behind on payments. You can leave certain fields (like their name, the date, and property address) as variables, which will be automatically filled in for each email from your CRM database.
Collect & Analyze Your Data
Have you heard the phrase “data-driven decision making” in recent years? It’s one of the biggest buzzwords in the business world right now, and refers to the process of collecting and analyzing data in order to develop business insights and inform strategy decisions.
In the world of property rentals, keeping a comprehensive database can help busy landlords stay on top of their portfolio, but also find ways to improve their business and make smarter moves when it comes to purchasing, selling, and leasing.
One way you could do this is by looking at all of your properties side-by-side to see their relative performance as financial assets. This makes it easier to see which units in your portfolio are yielding the highest returns, which have the highest margins, which have the most accrued equity, etc. Then, when you’re next looking to purchase a new property, you can look for ones which fit the profile of your best-performing properties.
But there are also lots of other ways you can use data to improve your portfolio’s overall performance, like looking at tenant demographics, the times of year that are best for turnovers and specific maintenance to be carried out, and recognizing changing patterns in market dynamics.
Technology is constantly evolving, and your rental business should, too!
In such a highly competitive industry, introducing digital elements within the rental experience can help increase efficiency. Because, let’s face it, today’s modern tenant wants things on-demand – and giving them new, tech-enabled ways to engage with your rental is a great way to earn a leg up on the competition. Portico, for example, a UK based estate agent recently launched Portico Direct – an online letting agent service for landlords where they can advertise their properties online for around a dollar, download customisable tenancy agreements, screen tenants and much more.
Here are some creative ideas on how you can use technology modernize the renting experience:
a. Property Viewings: As an alternative to in-person viewings, there are tons of new methods available, such as implementing digital keypads or advanced electronic code boxes. You can even introduce technologies like ShowingHero, which help automate the entire viewing process from start to finish. We recently wrote an article that walks you through all the options available, which you can find here (Link to ‘Self-Showings are needHere to Stay!’ article).
b. Marketing Your Property: Why not elevate your listings by including links to 360 videos or images? Virtual reality experiences could be well worth the investment, if it gets more eyes on your properties, and it’s likely to become even more commonplace as VR technologies get adopted across more industries.
c. Tenant Management: There are many online DIY property management apps that can help you automate tasks, such as rent collections, tenant management, maintenance requests, and more, without having to build your own responsive spreadsheets and functions.
Just as in traditional business, as the marketplace evolves to include more technology and digital resources, landlords should keep up with changing trends to remain relevant and competitive within the rental industry. Taking advantage of these tools also helps streamline your processes, and allows you to manage your business in increasingly complex ways from a single device.
This concludes our 3-part series of launching your own rental business. Approach it in the same way that entrepreneurs would tackle setting up a traditional business, and you’ll have a plan which gives you the confidence to start investing, a strategy for achieving success, and systems for maintaining that success in the long term.
Any advice you can offer to a rental investor trying to build and optimize their business strategy? Let us know in the comments!
Image Courtesy of Khwanchai Phanthong