By Jordan Cooper, director of verticals, Xero
It’s difficult to guess anything about the housing and rental property markets of tomorrow given the conditions of today. Month after month of fluctuating prices, demand and availability have made renting a delicate dance for landlords and tenants alike.
A recent IBISWorld report also pointed to an expected decrease in revenue for the larger apartment rental industry through 2021, but it’s not time to hit the panic button just yet. There are, in fact, a multitude of ways by which landlords and property managers can make their businesses steadier, more profitable and more beneficial to tenants — as well as to themselves.
The first option — hiring outside help — creates the least work for owners, though it may not be the right addition to every landlord’s toolkit. In an industry with occasionally fickle financial situations, landlords can lean on the assistance of accountant or bookkeepers or seek counsel from financial advisors.
Unless an owner already has the bookkeeping know-how, he or she is probably missing out on tax savings and seeing suboptimal returns on real estate investments. A qualified accountant can step in to keep the owner abreast of any and all tax savings while helping the investment portfolio grow with minimal risk. The costs associated with professional help may be a deterrent for smaller-scale property management businesses though, so for some owners, it makes sense to consider the alternative (and just as beneficial) tools available.
The key to steady and safe growth is ensuring that company finances are a tightly run ship. A wealth of digital solutions are available to today’s landlords that extend beyond the dollar signs and can streamline practically any aspect of the business.
In today’s changing landscape, having access to cloud-based, digital solutions will provide owners with the ability to adjust to those changes and capitalize on opportunities when they present themselves. From handling day-to-day minutiae to larger infrastructure overhauls, digitization can assist quite a bit, especially in the following ways:
- Automated data entry. For self-sufficient bookkeepers, the hours of manually tracking cash flow can be cut significantly with applications that track payments and expenses automatically. For example, with Xero’s cloud-based accounting software and mobile app, owners can access to everything they need to manage their businesses, allowing them to check bank account balances, reconcile transactions and track payments.
- Online payroll management. Have a building superintendent or maintenance staff keeping units in shape? Letting an online payment platform handle this staff’s compensation takes time off owners’ hand. It can also help keep payments on-time and remove the opportunity for human error.
- Easier tenant communications. Tenants appreciate a responsive and considerate landlord, and landlords prefer timely and responsible tenants. From periodic payment reminders via SMS and email to online maintenance request portals, there are several tools that can make the tenant-landlord relationship much easier for both parties.
- Online rent payments. Remember the last two points? They come together for the most important aspect of property management: rent checks. Integrating an online rent payment portal makes the process a paperless breeze for tenants, with digital receipts that make record-keeping simple and easy for everyone. Flexible and online payment options like Stripe and PayPal integrate with management software and can make it easier for tenants to pay. Additionally, landlords can easily set up automated clearing house (ACH) debit through GoCardless to make monthly rent payments effortless.
Beyond the tangible business tools available to landlords, efficient property management requires mindfulness and proactivity. Keeping an active tab on any and all necessary repairs to properties and acting upon them early is an easy way to avoid long-term, expensive damages down the road.
In order to effectively keep track of these needs, it’s important to also maintain open communication with tenants. Landlords must make themselves available to tenants by offering a channel for direct feedback. Whether by mail, text or messaging apps, this is a surefire way to make tenants feel heard and valued as “customers” while also giving them an outlet to share problems that arise with their units.
Speaking of maintaining solid tenant relationships, retention is — or should be — of the utmost importance in the current state of the market. Not only are vacancies piling up with lower demand in many cities, but tenant turnover is also generally becoming a costly concern for many landlords.
Finding responsible tenants and keeping them beyond a few years should be the top priority. That process begins with screening practices on tenant applications. Basic criminal background and credit checks, with consent from applicants, is a tried-and-true method, while requiring other qualifications like proof of employment and guarantors provides an additional safety net.
Have reliable tenants already? Long-term leases are a great way to keep them on board for a lower overall rent while keeping payments coming with no threat of nagging vacancies. Otherwise, simply taking the collection of tools at your disposal and combining them with a proactive approach is a proven way to keep tenants satisfied and in their units.
Just like any other business, success comes from a combination of efficient infrastructure, a quality tool set and the people skills to keep clients happy. Property management is no different, and it’s possible to thrive in even the most tumultuous times as long as owners think strategically about their and their tenants’ needs.
— Xero is a global provider of accounting software whose products and solutions enable property owners and managers to digitally track all moving parts of their businesses.