SF Apartment : December 2016
Automate Real Estate
by Chuck Hattemer
If you observe the current landscape of promising new business models, it’s clear that technology and the real world are intimately woven together more than ever before. Given increased access to affordable technical resources, it is now easier and more economical to connect various systems, tools, and apps to properly coordinate and control vast logistical networks of people and physical objects throughout the entire lifecycle of a service or product. This is particularly the case in the real estate industry, where technology companies are deriving inspiration from boutique brokerages and hyper-scaling with technology.
Residential property management, in particular, has had limited innovation beyond Customer Relationship Management (CRM) tools with a few custom bells and whistles. While client communication and follow-up are now seemingly automated, thanks to these CRM solutions, there is a significant untapped opportunity to simplify day-to-day rental management operations for owners and property managers. It begins with the right strategic investments in smart technology and systems. If executed well, an organization or individual can unlock stronger, more scalable customer service and business growth with a technology-first approach.
Our team has implemented technology throughout all parts of the rental process, and the efficiencies and savings from this practice have allowed us to scale from zero to 1,000 properties under management in under 18 months. I believe many of the same tactics we’ve adopted are also applicable to individual property owners or management firms that have a technically inclined person on staff.
Automation makes the most sense in the leasing period since this is the most labor-intensive—and therefore costly—stage of the rental process. To understand specific areas for improvement, I’ve broken down each pivotal step in filling a vacancy and how you can do it faster and for less with technology.
You no longer have to spend hours digging for comps. Just head over to Rentometer and look for listings from the past three months in the neighborhood of your rental. Take the high and low ends of that range based on the number of bedrooms and bathrooms (square footage matters less). Double-check the range you get from Rentometer by going to Zillow or Craigslist, where you should find ten listings similar to your property. Browse through photos and features objectively to see where your home realistically sits in that rental range.
With technology powering a more efficient and informed rental turnover process, you can start showing your vacant unit faster with an asking rent that holds firm in the market because of your research.
When it comes to listing and marketing your rental, you can use technology to offer a much more immersive listing experience as well as bring much more exposure to your listing. We’ve found that almost all prospective renters want to see a property before they apply and sign for it; this mentality is understandable and logical, but it also can be costly for a property owner or manager if you continually show your unit to disinterested or unqualified prospects. To streamline this time-consuming process, provide prospective tenants with a 360-degree virtual tour using technology from Matterport or snap an instant 360-photo with the Panono camera. At Onerent, we’ve integrated 360-tours on our premier listings and have seen a double-digit increase in the number of pre-qualified prospects.
As for where to market your listing, there are at least 50 websites that deliver renter leads. Wrangling with the complexities of all these sites can be quite daunting, but the reality is that only a few will generate consistent lead flow. Of the 1,000 units we leased in 2016, 40% of our prospective renters came from Craigslist, 25% came from Zillow, 20% from Trulia, 10% from HotPads, and the remaining 5% split among the remaining sites. The ratio of leads across these channels tells us that it’s important to list your rental on the top four sites while the others are more of a “nice to have” in case you get lucky with a niche rental marketing approach.
Regarding automation, it’s valuable to have a listing syndication partner such as RentLinx or Zillow Rental Manager. These services ask you to create a single listing, and they’ll automatically distribute it across a vast network of smaller listing sites. If you’re a management firm using one of the CRMs I mentioned earlier, they usually have direct integrations with a syndication partner.
24/7 Instant Showing Scheduling
Once your listing is live, and because you’ve set a competitive rental rate as mentioned earlier, inbound phone and email inquiries will flood your mailbox. The inquiries from interested renters are extraordinarily time-sensitive because of the likelihood that the inquiring individuals have also reached out to five to ten other similar properties. This time pressure means that you ought to have automated, instant follow-ups to all inbound inquiries. Most of the listing platforms such as Zillow do offer an auto-reply functionality, but remember, 40% or more of your leads are coming through Craigslist—a website that has not changed for nearly 20 years. Platforms such as Craigslist lack any automation capability, and, in fact, they actively fight against automation. To fill the gap, try using a service such as Zapier, which allows you to automatically detect any inbound email inquiry from your Craigslist listing and auto-reply with a showing schedule. For phone call inquiries, we’ve found it to be advantageous to set up an automated message when someone calls, directing them to our website to learn more about the listing and schedule a showing.
Showing a property is also a time-sensitive process for renters. If your schedule does not accommodate a prospective renter’s desired showing schedule, then you may be losing qualified prospects to other homes. To avoid this, give a full range of available showing times seven days per week. Put this schedule in your auto-reply messages and maybe even create a simple Google Form to allow renters to sign up. Once a renter schedules a showing, try sending automated text confirmations to both yourself and the prospect as the day approaches. In the daily text reminder, give the renter an option to cancel or reschedule so as to avoid wasting your valuable time.
Collecting Prospective Renter Feedback
During the showing process, it’s wise to build in some automated way for you to gather feedback from all prospects walking through the home. You can do this through an automatic text message that is sent out based on the date and time of your showing. Again, Zapier would be a great tool to help with this process. You’ll want to ask each prospect what they specifically liked or did not like about the home. The feedback you receive will help you hone in on any additional maintenance work required to rent the property faster. For example, if every prospect comments on how the sliding door is consistently falling off its track and that makes them want to see another option in the neighborhood, then you may want to invest in fixing the door. In some cases, the feedback you’ll receive from prospective renters is outside of your control, but can help inform you how to weigh certain property features for your next investment decision.
Instant Tenant Screening
Screening tenants these days is faster than ever and it goes without saying that eliminating paper applications is the first step in automating the qualification process. The screening stage of the leasing process is also a race against other rental owners or managers who may be courting the same prospective renter. To optimize the qualification process in a way that allows you to stay ahead of the competition but still ensure thorough screening, think about what truly qualifies an individual to rent a home. While a previous landlord reference may be a nice qualitative way to understand a renter’s personality, it is not essential to determine if the prospect is someone who will (1) pay on time, and (2) take care of your home. With over 7,000 prospects who have qualified through our automated system, we’ve had less than a 0.1% eviction rate and less than 5% major dispute or tenant-caused maintenance rate.
There are a few key pieces of technology that can help you efficiently resolve any turnover maintenance issues and set a competitive new monthly rent for the next year. When it comes to locking down a reliable, cost-effective maintenance vendor, it may be wise to look into platforms such as thumbtack.com, where you can source multiple bids simultaneously from a variety of qualified providers. It’s as simple as entering your project details and location, and within minutes your inbox will be full of quotes from nearby, client-reviewed maintenance professionals. Also, publicly accessible data is now available online for you to assess cost vs. value for capital improvements. With such a breadth of knowledge, you will quickly identify which maintenance is going to deliver a tangible return in the form of asset appreciation or increased monthly revenue. A word of warning, however: minor touch-ups and maintenance work will not increase your top-line rental revenue by as much as you may think.
One of the major benefits of implementing an automated screening process is that you reduce the risk of violating fair housing laws. Human intervention and judgment in the qualification process could result in a lawsuit if you ask the wrong question to a prospect or filter them out for the wrong reason. We’ve found our success comes from a three-level screening process: an automatic credit check, an automated employment verification, and instant income verification with an easy pay stub and bank statement upload options. We’ve found a safe spot to be with a renter whose credit is 650 or higher and whose stable monthly income or bank deposits are at least 2.5x the monthly rent.
Understandably so, automating the tenant move-in process is not quite as easy given the need for physical work and presence. With that said, there are plenty of ways to automate all the work that does not involve picking up boxes and unpacking household goods. We’ve found that the first automation is in the move-in inspection process. It can be tedious to weave in and out of every corner of your rental to snap photos of every perfection or imperfection. Instead, why not use one of the 360-degree, high-definition virtual tours that you created in the first step of listing and marketing your rental? If you’ve implemented high-definition 360-photography into your listing, you now also have a complete picture of the original quality of your home. For example, with a Panono camera, you can zoom into the kitchen in your 360 panoramic and see a scratch on the refrigerator. You can then tag the scratch virtually on the image and save it for later so that there are fewer surprises and disputes on move-out day with your tenant.
Alternatively, you can use an app such as Happy Inspector to guide yourself through a proper move-in inspection report with the tenant and then automatically generate and send to anyone necessary.
Automation, of course, vastly reduces operating costs for a property manager or maximizes net income on your investments for an owner. In the traditional model, property management is a people-intensive business with little to no focus on rapid scale. The average property manager will spend 45.7% of their revenue on labor costs. Less than 2% is devoted to acquiring new business. With over 200,000 property managers across the United States, the industry is incredibly fragmented. The technology of today can flip the traditional model for property management and rental ownership on its head if correctly implemented. Automation starts in the initial phases of the rental experience, and if carefully applied, you can still retain the necessary human touch throughout the process.
Armed with some specific examples of how to introduce more automation into your rental process, you can focus the time saved on scaling your investment portfolio, or if you’re a manager, your client base.
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.