SF Apartment : September 2017
by Chuck Hattemer
For a moment, put yourself in the shoes of a prospective renter in the near future:
You’ve toured three different apartments or homes in downtown San Francisco—some great but with a lot of interested people, others not up to expectations or just too expensive. As you explore the neighborhood around the third property you visited, you take out your smart phone and browse through more listings. You see there’s a new listing nearby.
You can call in or go online to schedule a showing. You sign up on your phone, identify yourself with a photo ID, and then are granted temporary access to the property on demand via smart lock.
As you walk in, the home becomes alive—lights on, blinds up, and an Amazon Echo welcomes you.
You: “Alexa, what’s the monthly rent for this unit?”
Alexa: “$3,500 per month, does not include utilities.”
You: “What are some fun facts about this home?”
Alexa: “Check out the magnificent view from the master bedroom.”
You peek into the bedroom and out the window to see a glorious Golden Gate Bridge view. As you look around, it seems to be the perfect fit, and the concierge-type experience ensures all of your questions are answered. You pull out your phone once again and find a free rental application that you can run instantly. The app runs a credit check, background check, and employment and income verification. Within a few hours, you are qualified and ready to sign a lease with just one click. When you move in, everything is set up to your specifications—internet, TV, even the furniture.
You can use your phone to schedule additional services, set up automatic rent payments, and report maintenance with video and photo documentation.
Life is easy.
After imagining this scenario, you may be excited for or be doubtful of its actuality. However, I think we can all agree that with the rapid development of technology in property management and renting, this experience is a very near possibility.
Also, I chose to highlight the future renter’s experience rather than the landlord’s because the renter experience is more relatable to the general public. Only some can relate to a landlord’s need to maximize rents and return on investment. Furthermore, the renter’s experience has the most room for improvement because the tenant–owner/manager relationship is often tense and publicly berated. If a renter’s experience is improved,property owners and managers improve their reputations and make more money.
The one-click rental experience doesn’t exist today in part because of lack of technology adoption. Even though we’ve made considerable progress toward this future, there is still paperwork and manual firefighting required. A lot of the hesitation in embracing technology in real estate is that it will wipe out jobs. Sure it will change the jobs in the real estate market, there may be some consolidation, but it won’t be massive. For example, technology could change an agent’s role to be more of a trusted advisor, acting and making recommendations on the data prepared by the technology.
To shift into the new era of efficient renting and rental management, we must not only adopt technology, but also optimize how we as property management professionals spend our time.
Run a Slack Analysis
As every owner or manager knows, the rental process is manual. You’ve got to find a tenant, show the home, screen the prospect, negotiate a lease, handle the move-in, etc.
In fact, according to a property management industry survey from RRD, 24% of property managers say they work overtime and 36% say they have almost no spare time. What’s more, 32% of property managers surveyed say they need to develop more organization in their business.
While it is important to retain human interaction, of course, a lot can change to optimize the process, develop automation with technology, and cut out slack from operations.
First, take a look at your leasing process. Map out the time it takes to close a lease—from the day you first make contact with your ultimate tenant. Break down that time into half-day increments. Now you have the workings of a slack analysis.
A slack analysis will allow you to identify time spent waiting and not working. The concept of this inward-looking analysis came from one my closest mentors. To understand how to optimize your business and what to work on first, you need to understand how the business operates.
If you properly map out all the activities involved in closing a lease and the working and waiting periods, you’ll start to notice when you can save time.
For example, if you screen prospective tenants, you likely require certain documents and information to run a credit check. There is usually time spent waiting for all the documents from the prospects, who are digging up old W2s and bank statements.
Create Business Rules
Even if your rental management operation is of the lowest technological understanding, you can still think like an engineer to create significant efficiencies in your business.
If you create simple business rules that are enforced through proper management and training, then you can focus on optimizing people’s time. Evaluating labor costs and time spent waiting will validate these decisions.
Going back to our previous example during tenant screening and the difficulty of collecting documents from renters: Why not remind your prospects to bring the required documents when they first schedule a showing? This minor change cuts out slack from the application process. By not having to wait on the applicant’s documents and not having to continuously follow-up, you save on labor costs.
There is no groundbreaking technology or automation in this example; there was just one small communication and preparation tweak.
Keep in mind, business rules do come with a cost: management. Only create business rules for parts of the process that will have less impact if they break. One element to consider is that leasing agents and front desk employees have the highest turnover rate in the industry; creating business rules for positions with a high turnover means spending a lot of management effort in re-training each new employee.
Now that you’ve run a slack analysis and established easy-to-implement business rules, you’ve shaved a few days off the tenant-screening process. We’re one step closer to the one-click rental experience. If you look carefully at your slack analysis, it’s likely there are some pieces that can be solved with technology.
For most property managers, technology solutions come in the form of buying third party tools to manage property. Maybe you’re hooked into one of the big property management systems and CRMs, or maybe you’re using a variety of smaller tools to get the job done.
While these tools are powerful, almost all the features are inward facing. This means that there is often slack created between your internal team and your customer when it comes to communication.
For example, you may need to collect all the invoices for maintenance before sending a customer an owner’s statement detailing expenses and income on the property. While managers track all the primary operational costs, there are still a number of expenses that the owner takes care of out-of-pocket—leaving the owner burdened with pulling together paperwork from various sources in preparation for financial events like tax season or a refinance.
This slack could be cut out by offering customers a tool such as Stessa, a platform providing investors with real time insights into the performance of their holdings. Whether automatically tracking and updating LTV or measuring asset return, Stessa provides a comprehensive view into an owner’s property portfolio, giving them all the info they need to make informed decisions. The system does this by hooking directly into an owner’s property management portal and bank accounts to automatically categorize and reconcile expenses. It’s like Mint for real estate investments, yet with full-service back-office automation to completely eradicate time-consuming owner paperwork.
By offering this tool, you set yourself apart from other property managers by cutting out wait time between manager, owner, and financial reporting.
Another one is electronic signatures. Why wait for tenants to find time to come visit your office to sign a lease? Instead, jump on Docusign and send out an electronic signature doc in minutes.
Maintenance is another area to remove slack with simple technology: a Dropbox folder of all your properties that includes documented serial numbers and model types of all appliances. This simple trick will save hours, because a vendor won’t have to visit the property just to determine what parts they need for a repair.
After all, most property managers claim maintenance is where they spend the majority of their time.
By carefully combining automation and human optimization, a property manager or owner can save hours of time and delight their renters and owners.
The process of saving time begins by taking an honest look at all the moving pieces of your business through a comprehensive slack analysis.
As someone relatively new to property management myself, I’m often frustrated that a lot of our competition relies purely on some form of “20+ years of experience” to sell their services.
Myself and my business do not have the luxury of claiming many years of experience, so for our business to make an impact in this relationship-driven business, we needed to execute with efficiency and transparency through technology. We took a good hard look at all the slack in the property management process and found huge opportunity to streamline processes with custom-built technology or business rules. Then, we focused on hustling to get jobs and execute quickly.
This exercise in time optimization is what has helped us lease and manage over 1,500 homes across 63 cities in the San Francisco Bay Area and Seattle in under 30 months.
I hope other property managers and owners can join in an industry-wide effort to seriously consider technology and changes in our business rules to create efficiencies that will amaze our clients. With a concerted effort, together as property management professionals, one day we’ll achieve the one-click rental experience.
Chuck Hattemer is the co-founder and CMO at Onerent, a hassle-free, technology-enabled property management service based in the San Francisco Bay Area.